The Government is to prop up the West Coast timber industry for at least another five years.
However, it plans to sell some plantations and scale back the rest while it pushes for a single processing centre.
The Crown took control of West Coast pine forests from Timberlands last year to try to stem annual losses of $5 million.
After a year-long review, the Cabinet has agreed to stop replanting the worst performing plantations and to offer Ngai Tahu land that could be turned over to agriculture.
Forestry Minister David Carter says the new plan should see the forests breaking even in five years.
There are about 250 fulltime jobs in the timber industry on the Coast and Mr Carter says some will go in the rationalisation.
Two-thirds of all logs from the forest are now sent from the coast to be milled. But the review says all the wood must be processed at an expanded local mill to be profitable in the longer-term.
The report says the plantations should be kept running as a going concern while they are reorganised and possibly sold altogether.