CANBERRA (Reuters) - Drought in Australia’s main food growing region of the Murray-Darling river system continues, with water stores near record lows despite recent rains, the head of the government’s oversight body for the system said on Wednesday.

Cracks are seen in a dried-up dam near the western New South Wales town of Parkes, located over 400 kilometres west of Sydney March 7, 2007. REUTERS/David Gray

The long-running drought has hit irrigated crops such as rice, grapes and horticulture hardest, but has had less impact on wheat with good falls of rainfall in grain-growing areas to the north of the Murray-Darling River basin.

“The immediate prospects are not good as only about 10 percent of Murray system inflows normally occur between February and May, and the latest rainfall outlook from the Bureau of Meteorology shows only neutral conditions across the Basin for the next three months,” said Rob Freeman, chief executive of the Murrary-Darling Basin Authority.

The Murray-Darling basin, which is as large as France and Germany combined, accounts for 41 percent of Australia’s agriculture and provides A$21 billion ($13.54 billion) worth of farm exports to Asia and the Middle East. Around 70 percent of irrigated agriculture comes from the basin.

Dry land wheat crops are also grown in the region but crops have struggled in recent years. The region contributed little to a boost in Australia’s wheat production to 20 million tons for the just completed 2008/09 harvest from 13 million tons harvested a year earlier.

The drought has already wiped more than A$20 billion from the $1 trillion economy since 2002. It is the worst in 117 years of record-keeping, with 80 percent of eucalyptus trees already dead or stressed in the Murray-Darling region.

Freeman said the volume of useable water in storage was now 1,470 gigaliters, or 16 percent of capacity, slightly higher than at the end of January last year, but well below the January long term average of 5,400 GL.

A recent heatwave across the country’s southeast and lower than normal flows had also increased the risk of algal blooms and aquatic plant growth along the river, also bringing three mass fish kills due to high water temperatures.

Freeman said the prospects for irrigation in 2009-10 would depend on future rainfall and system inflows, though enough water would be carried over to meet critical human needs, with the basin home to 2 million people.

($1=1.551 Australian Dollar)