A "distribution allowance," which is essentially a rebate of six cents per litre of fuel for farm use, was eliminated in Thursday's budget, effective immediately. Agriculture Minister Verlyn Olson said Alberta was the only province that had both a tax exemption - in this case nine cents a litre - and a rebate for farm fuel.

"The exemption remains completely untouched and that leaves us in a position that's still very favourable if you compare to other jurisdictions across the country," Mr Olson said during a conference call.

"Certainly, we're very conscious of the fact that this will add some expense for farmers and that this is an issue for a lot of producers. I've certainly got sympathy for that position, but I still needed to find savings somewhere."

The elimination of the fuel rebate will save the province about C$30 million, Mr Olson said.

"That hurts us," said Lynn Jacobson, president of Wild Rose Agricultural Producers.

The farmers group had recommended the government increase the qualifications necessary to receive the rebate, in order to reduce the number of eligible recipients, instead of scrapping it entirely, he said.

Mr Jacobson said he is also worried about the impact of cuts to rural municipal infrastructure such as maintenance of bridges and culverts.

Among other cuts, the budget slashed $8 million from the Alberta Livestock and Meat Agency ( ALMA) for one year. The provincial agency will still receive a C$30 million grant.

The cut comes as the province tries to expand markets for its agricultural exports.

"Given the targets that we were given to find savings, it was just felt that perhapsALMA could sustain a reduction like this without it being a body blow," Mr Olson said.

The budget also saw capital grants for irrigation trimmed to $21 million a year from C$24 million. There were also 30 jobs eliminated at Alberta Agriculture. Olson said 10 positions were vacant but 20 people lost their jobs, mostly in Edmonton.