CHAH SINGH, Australia, Aug 29 (Reuters) - Ian Shippen is something of a rural prophet on the arid salt plains 1,000 kilometres (600 miles) west of Sydney.

A thoughtful 42-year-old with spiked hair, Shippen believes the drought shrivelling Australia's food bowl will forever change agriculture on the world's driest settled continent.

"We are going back to our natural way of farming, we are going back to the way it was 100 years ago, growing good broadacre areas and running sheep," the former rice farmer told Reuters at his property near the rural hamlet of Moulamein.

"We will have big areas of country that are pretty bloody useless, running one sheep to 5 or 6 acres. This drought is going to knock it all around."

Shippen, like thousands of others, is searching for ways to beat the drought and is gambling everything on a gradual shift from irrigated cropping.

Nine years ago he grew rice on 2,000 acres of once-desiccated land opened up by water piped from the eastern Australian alps, a full day's fast drive away.

He and wife Camilla, a city doctor's daughter, saw change coming as a decade dry began and water prices began to creep upwards, changing the economics of irrigation.

"The price of water is just getting more expensive. Water is a liability, not an asset anymore. Farmers will sell their water and they will just have a big dry block," Shippen says.

Photo/ REUTERS

A local councillor, Shippen has enormous respect from other farmers who are closely watching his strategy of selling precious water licences and using the money to buy ever more land.

Starting with a few thousand acres, he now owns more than 180,000 acres, carrying 45,000 sheep and lambs, 8,000 cattle and A$10 million ($8.2 million) in bank debt, demanding A$900,000 a year in interest payments alone as the drought shreds incomes.

"Debt focuses the mind. We are going 100 miles an hour just to pay the bankers," he tells Reuters on the verandah of a sprawling home fenced by white flowers.

But where others see drought gloom, Shippen also sees opportunity, although like everyone he is nervous of the summer ahead with crops dying and stock sales around the corner.

"For those who hang on there are going to be some cheap farms around. That's the thing about farmers. We are so-called united, but if somebody can make a quick buck out of another farmer we will," he quips.

The biggest change, Shippen says, is not drought but offshoot water politics as Australian governments become aware of the need to better conserve a precious resource in the face of possible permanent climate shift.

Shippen bemoans that the current commodities boom and sale of Australian resources to China means farmers have lost the political clout to argue for national projects like turning coastal rivers westwards to possibly beat future droughts.

"We are only 2 percent of the population, we're irrelevant, We're expendable," he says.

"We are just going to sell stock down, cut our wheat for hay, any crops that are half good we'll bail for food, get rid of a couple of people who work for us - we'll have to sack people - and hope to God we can just ride this out."

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