Crocodile farmers across northern Australia say the industry is doing it tough, as a global oversupply of croc skins starts to bite.

Industry veteran John Lever, who started Queensland's first crocodile farm in 1981, said the profit margins on croc skins were getting very tight.

"It's hard yards for crocodile farmers right now, we're just not getting the returns," he told ABC Rural.

"I've been working in the industry since 1972 and I never, ever thought it would come to this day where we would have over-production in the world market.

John Lever is downsizing his crocodile farm in Queensland. ( ABC Rural: Amy McCosker )

"Countries in Africa, there's been some huge investments and there are farms now with 100,000 crocodiles."

Mr Lever said he is now in the process of downsizing his farm in central Queensland and focussing more on tourism.

"Two years ago I wanted to double the number of crocs on this place, but right now I'm downsizing," he said.

"I'm not collecting any crocodiles from the wild and I'm just going to rely on my own captive breeding situation."

'Storm will pass'

Professor Grahame Webb from Crocodylus Park near Darwin, said the oversupply of crocodile skins was a major concern for industry, but the issue was complex.

"The price for premium grade skins with absolutely no blemishes at all is still high, but as standards have changed, there's been all sorts of second and third-grade skins dumped on traditional markets and that's made things tough," he said.

"People sometimes start investing in industries as if there's limitless growth, so there's got to be a correction when you get over-production.

"Some people will survive through this and have good markets, some will adapt and work their way through, others won't be able to do that.

"Here at Crocodylus we've had to really curtail what we're doing while this storm passes over and it will pass I believe."

Crocodile skins from farms in northern Australia are turned into high end fashion by companies in Europe. ( ABC Rural: Marty McCarthy )

Diversification key for croc farms

Angela Freeman from Hartley's Crocodile Farm north of Cairns, said the crocodile industry had seen plenty of ups an downs over the past 30 years and was confident her farm would survive the current gloom.

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She said her business was focussing on a range of diversification options and had started making crocodile jerky, "which are selling like hotcakes and has become a whole business in itself," she said.

"We've got people who now buy the oil from the crocodile fat and even the carcasses of crocodiles are being made into a blood and bone organic fertiliser."

She said the business was looking at opportunities to make leather products locally and felt there were some untapped markets for the unique product.

"I'm excited about the properties of crocodile leather and I'm hopefully investing more money into getting some research done on this," she said.

"I know it has the most wonderful properties in terms of pliability and strength and I firmly believe we should be making practical footwear for people who are on their feet all of the time [with croc leather] and that could be a whole different market."

Concerns for poorer nations as industry changes

Professor Grahame Webb, who developed Crocodylus Park in 1994 as a crocodile research and education facility, said the crocodile industry was facing a number of issues.

"There is an over-production but on top of that, you've got to look at it from the point of view of fashion companies that are under increasing attacks from animal rights activists who don't believe people should use any leather, wool or anything that comes off an animal," he said.

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"So they've been forced to get more control of their supply chains. I can see it from both sides."

Professor Webb, who has long been a champion for the concept of conserving wildlife through programs of sustainable use, said as the industry changed he was worried about the unintended consequences for the world's poorer communities.

Professor Grahame Webb is regarded as one of the world's leading authorities on crocodilian research and management. ( ABC News: Steven Schubert )

"The thing I'm most concerned about, is that as the brands and big companies try to tighten up their supply chains, that they don't undermine the conservation programs around the world that are based on local, rural people being able to harvest crocodiles," he said.

"Papua New Guinea is a classic example, where for many people, the only source of cash income they get comes from the few crocodiles they harvest.

"It's totally sustainable, it's monitored all the time, it's been going on for 60 or 70 years and if they're not careful, those sort of products will fall off the horizon because they don't necessarily meet these strict production procedures and that's what I'm more frightened of.

"I think people should pay a premium for [croc] products that have a conservation and humanitarian advantage."