AbstractWith its potential for high yields and high animal output, lucerne appears to be an underexploited crop in British agriculture. In this paper an attempt is made to assess the prospects for expansion of the area of lucerne in Britain from an economic viewpoint, concentrating on lucerne as a conservation crop. Under good management lucerne is shown to have lower production costs than grass and its inclusion in the diet of dairy cows, but not beef cattle, could significantly lower winter feed costs. However, under apparently similar growing conditions, lucerne yields on different farms vary significantly, ranging from 9 to 13 t dry matter ha−1a−1. At the lower yields, the economic attraction of growing and feeding lucerne in place of grass is small. Moreover, since potential lucerne production is concentrated in the south and east of Britain, lucerne competes with other arable crops. For lucerne to offer a gross margin per unit area comparable with these, the price for conserved lucerne would have to be set at a level at which dairy farmers would derive little economic advantage from feeding it. Thus, although lucerne is a forage crop with some potential, at present it is likely to offer economic possibilities only where producers can combine high yields with on‐farm utilization of the