Rising irrigation water prices are being caused by the drought, the Australian Dairy Farmers believes.
In a statement released this week, the ADF president, Terry Richardson said the Murray Darling basin had received the lowest rainfall on record in some places over the last 30 months.
Mr Richardson also argued against calls to "pause the Murray Darling Basin plan".
"The dairy industry has largely supported the Basin Plan, mainly because it is underpinned by science and economics,'' Mr Richardson said.
"A plan that ensures a balance between irrigation and water required to maintain river, wetland and floodplain health is not just necessary, it is good policy.
"The Australian Dairy Industry Council (ADIC) has argued through countless submissions to government that for the Basin Plan to have the most impact, the acquisition of water for environmental use must always be rooted in scientific and economic evidence.
"Not only that, but the government must also ensure an open and efficient water trading market, coordination between water recovery programs such as irrigator buybacks and infrastructure reform, respect for individual property rights, and consultation with affected communities.''
He said consultants Aither, have found the market to be working effectively and that high prices are the result of high demand and low supply caused by persistently dry conditions and below average rainfall.
"Ultimately it is the devastating impact of drought that is most responsible for rising water prices.''
The ADIC has requested the government to commission the CSIRO to develop a transformational water supply blueprint for Australian agriculture.
The government, meanwhile, has announced the development of a National Water Grid to bring together water experts, scientists and economists to look at how large-scale water diversion projects could deliver reliable and cost-effective water to farmers and regional communities.
"Ultimately, it is not the answer to simply abandon the Basin Plan. The dairy industry, together with the National Farmers’ Federation, other farmer groups, and federal government, are working to relieve pressure on irrigators while ensuring a healthy river system.''