Community foresters and their workers will be able to access transition support as the native timber industry begins to wind up.
It comes amid revelations that a program to plant millions of trees over the next decade planted only 4,000 trees in its first year.
The Community Forestry Support Package was announced by the Victorian government on Friday which will give forest produce licensees and firewood operators compensation for undersupply since November 2022.
The package will also compensate operators for plant and equipment no longer required and reimburse businesses in full for worker redundancy payments.
Community forestry workers, including seed collectors and chip-truck drivers, can also access payments, including redundancy top-ups and a $3,000 one-off hardship payment.
Businesses can choose whether they want to exit from the industry straight away or nominate a date up to 30 June 2024.
"The Community Forestry Support Package provides community foresters with clear options and pathways to make decisions about their future and transition out of the native timber industry," Agriculture Minister Ros Spence said.
A Forestry Business Support Package, planned to launch before the end of the year, will offer compensation and reimbursement for plant and equipment, as well as worker redundancies, to businesses that are heavily reliant on the native timber industry but are not eligible for the initial package.
VicForest harvest contractors will also be offered five-year contracts for Forest Fire Management Victoria (FFMVic) bushfire risk reduction works, starting from July next year.
Harvest and haulage contractors can undertake forest and fire management works through three seasonal work packages - that will focus on strategic fuel breaks and storm debris removal - up until the end of June next year.
A Harvest and Haulage Support Package has also been released to support contractors taking up a new contract or exiting the industry including compensation for equipment, loss of income and reimbursements for businesses for redundancy payments.
It brings total support for the forestry transition to more than $1.2 billion.
Premier Jacinta Allen would not specify when VicForests would be wound up before the end of the year as part of the transition.
"We are continuing to work through that in the broader context of the forestry transition program that is in place," she told journalists at a media conference in Ararat.
"There's been some steps towards the future of VicForests, but there'll be more to say as we continue to work through those processes."
It comes as 4000 of an initially-promised 30 million trees at a cost of $110 million for harvest had been planted under the Gippsland Plantation Investment Program, originally announced in 2017 to support the transition.
The target has now been revised of 16 million trees at a cost of $120 million.
Nationals MP for Gippsland South Danny O'Brien said the revelation in estimates showed there was an inability to deliver promises to communities.
"It was in the 2017-18 Budget that the Government committed $110 million for more plantations - a commitment we welcomed as we need more trees in the ground to support local jobs and industry," Mr O'Brien said.
"That commitment became even more important when Labor disastrously decided to shut down the native timber industry. But it has sat on its hands for six years and delivered virtually nothing."
