The Government's involvement in commercial forestry on the South Island West Coast will be under review during the next year, following the decision to wind up the failed state owned forestry enterprise there.
From next year more than 20,000 hectares of exotic forests owned and managed by Timberlands West Coast will be transferred to the Crown Forestry Group.
A Ministry of Agriculture and Forestry briefing paper for the new government sets out the challenge facing Crown Forestry.
The briefing paper says the forests it will inherit from Timberlands West Coast are of poor quality and in some places uneconomic to harvest and replanting won't be viable in many areas.
Crown Forestry general manager Charlie Schell said the state-owned enterprise was running a deficit in excess of $3 million a year, driven by a fall in volume of about 50%.
Mr Schell said Crown Forestry will be expected to complete a review in a year, looking at the future of investing in exotic forest on the West Coast.
In the meantime it has contracted the forest management company P. F. Olsen to run the West Coast forests and has had discussions with key customers about the commitments to keep local mills supplied.