Farmers in Australia's food bowl Murray-Darling river basin need to adapt to continuing water shortages as climate change prolongs the worst drought in a century, says Climate Change Minister Penny Wong.
The basin, which covers an area the size of France and Germany, accounts for 41% of Australia's agriculture and provides $A21 billion of food exports.
"We can and must adjust for a future where there is likely to be less water," Ms Wong said.
Record low inflows have forced the government to cut water allocations to irrigators and buy water from farmers to make sure enough flows through the ailing Murray River, which runs across three states in Australia's southeast.
Some farmers, particularly rice growers in New South Wales, have had no water allocation from the river system for the past three years in a clear sign of the growing impact of climate change, Ms Wong said.
"For them, this climate change, this drought, is not a theoretical issue, this is a here and now issue."
The problem is worst in Ms Wong's home state of South Australia, where two vast lakes near the river mouth are at their lowest recorded water level, currently about 40 centimetres below sea level.
The government is weighing up whether it can find enough water to save the lower lakes, or whether it should open barrages near the river mouth and allow the lakes to flood with sea water, a move green groups say would be an environmental disaster.
The government has earmarked $A3.1 billion to buy irrigation water back from farmers to boost environmental flows.
Earlier this month, the government paid $A19 million to buy a cotton farm larger than Singapore so it could release 20 gigalitres of water - enough to fill 20,000 Olympic swimming pools - back into the river system.
Scientists say water use along the river needs to be cut by half to keep the river healthy.