Two sawmills have already stopped work, but industry insiders say if new markets for woodchips and other residue aren't found then all sawmilling operations in the state will stop within months - putting hundreds of workers out of a job.

Both the state and federal governments have been briefed on the dire situation, which suddenly came to a head when Artec informed its suppliers this week that it was suspending its operations for February.

Federal Environment Minister Tony Burke met industry representatives in Hobart on Wednesday, and planning is under way to send Deputy Premier Bryan Green to Japan and China to source alternative buyers.

Forest Industries Association of Tasmania chief executive Terry Edwards said work had started to find a short-term but immediate solution of extra storage, which would allow sawmillers McKay and Barbers to resume operations.

He said medium and long-term solutions were also being investigated.

However, he said that if these weren't found ``all sawmills will eventually close''.

``Although it's not necessarily a surprise that Artec took the decision they have taken, the speed with which this has happened was,'' Mr Edwards said.

``But we will not leave any stone unturned to find a solution to the problem.''

The industry has been assured by Artec that the suspension is temporary, but many fear it will not resume accepting woodchips at the start of next month. Artec did not return calls yesterday.

Tasmanian Sawmillers Association chairman Fred Ralph described the situation as disastrous.

``I think this is extremely serious,'' he said.

``I don't think we were given any indication that the sales were, in fact, going to cease and it appears that this is the case - the boats simply aren't coming (to collect woodchips).''

Stakeholders in the intergovernmental agreement process are due to meet on Monday, but Mr Ralph said addressing sawmilling issues should come first.