Tradewinds signed a 10-year agreement with the state in August 2001 giving it rights to harvest 12,000 acres of eucalyptus and maple planted in the Waiakea Forest Reserve in the 1960s. Difficulties obtaining financing have set the project back substantially.

That gives the state right to cancel Tradewinds' license this month, but that is unlikely, because state officials still hope the project will be completed.

At stake are about 400 jobs, $6 million in licensing fees for the state and an attempt to diversify Big Island agriculture, according to Tradewinds and state officials. In hopes of reaping those potential benefits, the state is extending the time Tradewinds has to secure financing and start construction of a timber processing plant, said Dan Davidson, the Department of Land and Natural Resources deputy director for land.

"We're not in any hurry to stop them or impede their progress," Davidson said. However, "the point is they'll have to get their financing very soon in order for them to make the progress they and we are looking for.

"We're going to need to see some major activity on their part."

Tradewinds also stands to lose a large potential customer: Prudential Timber Investments Inc., which owns a separate, 21,000-acre eucalyptus forest on the Hamakua Coast, if it cannot secure financing to build the plant by year's end, said Tradewinds partner Don Bryan.

Tradewinds hopes to secure the money this summer and start construction next year, Bryan said. But even then, hopes for diversifying the economy by adding a lumber mill will be delayed at least three years, the time required to build the plant.

Money to build the manufacturing plant for veneer and plywood has been difficult to acquire for several reasons, Bryan said.

"We ran into very difficult economic times in the United States and in the forest products industry in particular" after signing the state deal, Bryan said. "We seem to be coming out of that now.

"All the signs we're seeing continue to look good over the next few years. That gives our potential investors a lot of reason for optimism," he added.

While current figures are not available, a decade-old industry estimate places statewide forest industry sales at $29 million, with 1,000 jobs generated. On the Big Island, there's an estimated 40,000 acres of eucalyptus, according to the Hawaii Forest Industry Association.

A fully mature industry could be worth millions more, according to industry experts, particularly if the Big Island had a timber processing plant capable of producing relatively valuable products for export and local consumption, such as plywood, veneer and possibly ready-to-assemble furniture. The island currently has a few small-scale processors, but no one capable of handling the volume envisioned by Tradewinds.

Even if Tradewinds' project finds financing, it could collide with environmental interests. Although the timber in question was planted on state land specifically to harvest, the area has become a habitat for native plants and animals. There's also concern that commercial logging will result in increased noise, traffic, insecticide use and runoff.

Still, Tradewind's immediate problem is proving to the state and Prudential Timber that the project will proceed sometime soon. Boston-based Prudential has planted 21,000 acres of eucalyptus on former Hamakua Sugar land leased from the Kamehameha Schools, which could help justify Tradewinds' investment.

Some of those trees will be ready to harvest within the next few years, while others need more time if they're to be used to make veneer, said Hank Page, vice president for Prudential Timber's U.S. investments. Prudential Timber is continuing discussions with Tradewinds over the purchase of its trees, as well as with other potential buyers, Page said.

But there's no urgent need to sell the trees today, he said.

"They're not going anywhere," Page said. "We're just at a stage in this project where we need somebody interested in developing a market for these trees."

If a local processor for veneer and plywood cannot be found, Prudential and the state may have to sell their timber to process into wood chips, which could be exported and turned into paper or plywood.

But the state would rather have its trees processed in Hawai'i, rather than see such value-added work and jobs exported overseas, Davidson said.

"We're still optimistic about the whole idea of commercial forestry on the Big Island, and in general think it's a question of when, not if," he said.

If Tradewinds is unable to fulfill its plans, other opportunities may arise, said Stephen Smith, president of the Hawaii Forest Industry Association.

"It would be an unfortunate opportunity," he said. "I think we could be able to attract interested parties — local groups on a smaller scale than Tradewinds, and national and international parties as well."