LUCERNE seed prices have fallen flat.

And the drop has left many seed growers struggling as they also face low grain and cattle prices and rising production costs.

High lucerne seed prices during the past few years had attracted many new players into the global lucerne seed market, particularly in the US.

But a rush to grow the lucrative crop has saturated some of the commodity variety markets and is causing pain for many mixed croppers throughout South Australia's Upper South East irrigation district.

The glut has been compounded by the dairy industry's woes, as much of the lucerne grown globally is for dairy feed.

Lucerne Australia chairman Shane Oster said prices had fallen from recent highs of $5.50/kg to $3-$3.50/kg.

However, growers of longer-term specialist varieties are still doing well as prices for these varieties are profitable.

A large-scale lucerne seed producer, Brendon Smart, from Keith, said growers had faced a challenging couple of years of marketing.

However, he said the medium-term outlook for lucerne seed remained good.

"It has certainly come off in price on what it was two or three years ago, which was largely due to the rapid increase in production in Australia, and which was probably not sustainable," he said.

"In some segments of the lucerne seed industry there were some who chased production a bit irresponsibly and of course that puts pressure on the market."

Mr Smart said while the lucerne seed market faced challenges now, not all market segments were affected.

The softening in some of the lucerne seed market had coincided with very low grain prices and low cattle prices.

Mr Smart said lucerne seed was just a small part of an overall picture of severe challenges facing rural Australia.

"From a big picture view, rural Australia is facing one of its most difficult periods in 40 years, and lucerne seed is but a small part of that," he said.

"Lucerne seed was seen as the golden egg, and because there are no major barriers to entry there were some new entrants coming into the market.

Mr Smart said the industry would go through a small period of adjustment and less lucerne seed would be grown on marginal country.

The US is one of the lucerne seed market's largest buyers and producers, but demand has fallen on the back of the dairy industry's woes.