Galantamine has been found in plants in the wild. The researchers say that if it can be farmed it could be massively helpful to those afflicted with the illness.
Professor Trevor Walker, who is leading the research trial, tells BBC News, "The compound that we're getting from the daffodils will help, if it's supplied properly and monitored properly, slow down the development of the disease."
He adds that if progression of Alzheimer's can be slowed, there is "a very good chance" it could help people stay out of nursing homes for a few years.
The trial is currently taking place on seven sites in Wales' Black Mountains.
"We have noticed a significant increase (of galantamine) with the altitude," Kevin Stephens, a farmer, says. "So it could be purely the altitude, it could be the climate at the altitude, we don't know."
Farmers say growing daffodils gives them an additional way of using the land.
Farmer John Price says, "We have always got to look at alternative enterprises and other ways of making use of hill ground other than livestock, and that's the only use this type of ground would have."
