Queensland Federal MP Bob Katter has decided not to hang up his trademark Akubra hat after the company agreed to continue making his personal hats out of Australian rabbit fur, but no-one else's.

Akubra has used a mix of local and imported skins in recent years, but decided last month to shut down its rabbit fur processing operation at Kempsey on the New South Wales Mid North Coast and buy processed fur from Europe only.

The company said it found it difficult to source Australian skins, was not making enough money and needed to cut costs to stay in business.

It prompted Mr Katter to boycott wearing his Akubra which led a knitting group in his electorate to make him a beanie to wear on cold Canberra days.

The Member for Kennedy has been unable to pull a rabbit out of the hat and get Akubra to overturn its decision.

But he informed reporters in Canberra this morning he had a "very important announcement" to make about a "tiny breakthrough".

"I'm very pleased to say that we have negotiated a compromise which is not very good at all but it still enables me to wear an Akubra that will be made out of Australian rabbit fur," Mr Katter said.

"There'll be a continuation of the use of some rabbits' fur."

It is understood the company can only supply Mr Katter's hat until its Australian skins run out.

Mr Katter said negotiations were continuing and he was not giving up on the company using Australian rabbits once again.

He said he wanted "people to come forward and say they want to set-up rabbit factories on a very big, giant basis".

An average of 24 skins are needed to make a single hat with Akubra estimating it needs between 2.5 million and 3 million skins a year to meet demand.