AUSTRALIA is facing a crisis in agricultural research and development funding, according to the Australian Institute of Agricultural Science and Technology.

The institute's national president Geoff Thomas said the situation was so dire that the future of Australian agricultural production was threatened.

"Investment in agricultural R&D is the backbone of the agricultural industry but it has been diminishing in real terms for the past 25 years at least," Mr Thomas said.

"Agriculture has maintained productivity growth of about 2.8 per cent over the past 20 years but this is slowing - a trend we believe is linked directly to the running down of research effort and support."

Mr Thomas said one of the driving forces in the downward spiral in agricultural research and development was declining state and federal funding.

Others include a lack of graduates in agricultural science.

Mr Thomas' criticism comes as a senate hearing was told last week the Department of Agriculture, Fisheries and Forestry would have to cut its budget by $5 million to meet the Federal Government's efficiency dividend.

And the Victorian Government has decided to quit some elements of canola breeding in Victoria, with an announcement imminent that prominent oilseed breeder Wayne Burton would move from the Department of Primary Industries to Canadian company Viterra, which recently bought ABB Grain Ltd.

The DPI is believed to be wanting to direct its oilseed resources into germplasm development - following a similar move in state wheat and barley breeding programs in recent years.

Mr Thomas said he was concerned savings in DAFF's budget would result in research cuts.

Mr Thomas said governments were opting out of agricultural research, hoping the funding gap would be taken up by private companies.

"But commercial companies will only do research that makes money for their shareholders," he said. "Basic research doesn't get funded unless it's for a popular project."

Mr Thomas said agricultural extension was also being starved of funds, with the closure of the Mallee Research Station at Walpeup a recent example.

"The government wound down funding to the point where they actually closed it," he said.

Both state and federal governments were unavailable for comment.

The AIAST is holding a two-day forum in Canberra on March 11-12 to address the funding issue.