Prime Minister Scott Morrison will on Thursday announce that $100 million will be spent on the establishment of nationwide institute and up to five regional forestry centres of excellence.

The plan forms part of a $219.5 million forestry package, which includes $112.9 million in grants for the adoption of new wood processing technologies.

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Mr Morrison said the grants were intended to assist manufacturing and processing businesses to maximise log recovery, process smaller diameter logs and create new and innovative wood products. There will be $6.6 million in the package to extend funding for 11 regional forestry hubs.

Mr Morrison said global demand for wood products was set to quadruple by 2050.

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"The pressures on the building industry and the uncertain international trade situation has made it clear that local wood products and local skills are critical," he said.

"Just ask any tradie who has been trying to get wood products."

Bass Liberal MHR Bridget Archer said the new foresty package built on funding commitments by state and federal Liberal governments to strengthen the Tasmanian timber industry.

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Lyons Liberal candidate Suzie Bower said the package would support regional businesses and communities in the electorate.

Tasmanian senator Jonathon Duniam said it was essential the country increased its self-reliance on wood supply, which in turn would create more job oppportunities in research and manufacturing.

Instead of importing products from overseas, we want to grow the trees here, process them here and add value to them right here in Australia," he said.

The University of Tasmania and the Australian Forest Products Association last year proposed a $200 million forestry centre of excellence be built at the university's Newnham campus.

Under their proposal, the facility - similar to concepts in New Zealand and Canada - would be funded by $100 million from the federal government and $100 million from industry bodies.

At the time the proposal was announced, AFPA chief executive Ross Hampton said the centre was much needed if Australia wanted to avoid being left behind.

"A significant decline over the past 20 years in government investment in forest industries research and development means Australia risks missing out on new industries being created by the global shift to a circular economy," he said.

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