The Heart of the South West (HotSW) Local Enterprise Partnership is working with the Woodland Renaissance Partnership and the Forestry Commission to offer the fund, which is hoped to increase the value of the forestry and timber industries in the area.
The region has nearly 60,000 hectares of conifer woodlands and over 18 million cubic metres of standing conifer timber according to the National Forest Inventory, more than any other region of England.
HotSW chair Tim Jones said: "South West forests are capable of sustainably producing 600,000 cubic metres of conifer timber every year for the next 25 years, and beyond. To support this, the region desperately needs to see an increase in its local sawmilling and timber processing capacity. If fully utilised, this timber could support a big increase in both large and small scale saw-milling, with the potential for over 1000 new jobs in timber processing and forestry management.
"At present most harvested timber is being transported long distance for processing, to locations such as north England, Wales and Germany. Whilst these markets have allowed many South West forest owners to sell their timber, the prices have been around 25% less than in the rest of the UK because of the high costs of transportation. This has held back the forestry sector, particularly in Devon and Cornwall.
"Now that we have good information about the availability of timber from the region’s forests, we are working with the forest industry and the Forestry Commission to help encourage investments from both existing and new businesses."