"It's perfect for people who want to take poor performing or erosion-prone land and convert it to more profitable forestry use."
Mrs Goodhew said the scheme would support employment in the forestry sector and "there are significant environmental benefits".
Nationally, 12,000ha has already been planted under the previous scheme - mostly on erosion-prone land - which had improved water quality and reduced the impact of severe flooding, she said.
Landowners receive $1300 per ha for planting new forest, forfeiting the carbon credits to the Government for the first 10 years.
"The grant lowers the cost barriers for regional New Zealand by covering the establishing costs of new planting," said Mrs Goodhew.
She said another goal was to move timber "out of the commodity basket" and into processing.
The issue of the rapid rate of deforestation was raised at the announcement.
Mrs Goodhew agreed the number of hectares being planted had dropped markedly.
"There is no magic bullet to change confidence in forestry sector planting.
"I believe if we can get the confidence to further processing so we don't have forestry seen as simply harvesting logs and sending them offshore so there's a good return in forestry for those who plant, that gives us a much better chance ..."
Mr Falloon hoped farmers would use the scheme.
"We did some five years ago, it allowed us to use a block of land which had quite a bit of native bush so it worked really well."
He said it gave landowners an economic return which they didn't previously have, satisfied climate change obligations and provided jobs.
MPI Director Partnerships and Portfolio Advice Stu Taylor said the government had 16 different grant schemes and a lot of Wairarapa people were using the sustainable farming fund.
Applications open at the end of the month and close June 30.
