A "distribution allowance" that gave Alberta's farmers a six-cent-per-litre break on diesel fuel for farm use is a casualty of Thursday's provincial budget, effective immediately.

Finance Minister Doug Horner's 2013-14 budget eliminates the farm fuel distribution allowance portion of the province's Farm Fuel Benefit Program, ending a benefit which cost the province an estimated $32.5 million in 2012-13.

The six-cent-per-litre fuel distribution allowance on marked diesel, renewable diesel or heating fuel will not be applied to any fuel purchased after 3:15 p.m. Thursday, the province said.

Bulk fuel suppliers must "immediately" adjust prices charged on farm fuel to reflect the discontinued allowance, the province added.

Alberta farmers taking part in the benefit program will, however, continue to get their nine-cent-per-litre tax exemption on marked ("purple") gasoline and diesel, 6.5-cent-per-litre tax exemption on eligible propane costs, and 1.5-cent-per-litre tax exemption on eligible aviation fuel costs.

Eligible producers must be "actively and directly farming by controlling farming assets and making the day-to-day management decisions," must have commodity production worth at least $10,000 (or $5,000 to $9,999, if the farmer's only other significant sources of income is CPP or OAS), and must renew their eligibility every three years.

In his speech Thursday in the legislature, Horner said the province's latest budget "is changing the way we invest in agriculture" and will focus ag spending on "programs and initiatives that will grow our industry, and ensure it's sustainable and internationally competitive."

"With the federal government scaling back income support programs for producers" and the end of the fuel distribution allowance, Horner said the province "can focus on research and innovation, on food safety, and on building the value-added side of our industry and opening new markets and new opportunities for our producers."

In all, including the end of the diesel allowance, Thursday's budget cut $44.8 million from the agriculture ministry's operating and capital budgets.

According to representatives from the Alberta Barley Commission and Alberta Wheat Commission (AWC) -- who learned the budget details on a conference call with provincial Ag Minister Verlyn Olson Thursday evening -- the ag budget cuts include 30 jobs, among them six senior ministry positions and three from Alberta Financial Services Corp., the provincial ag financing agency.

Cuts were also made in the budgets for the Alberta Livestock and Meat Agency (ALMA) and for irrigation and farm water programming, the commissions said Friday.

AWC chairman Kent Erickson said there’s never a good time for ag budget cuts, but two years of good grain pricing will make the cuts easier for producers to handle.

“The government had to make cuts and it’s nice to see that they were not too harsh with the line items that were removed," he said in a separate release Friday.

"Bitumen bubble"

Thursday's 2013-14 budget for operational expenses for the agriculture ministry estimates $139.71 million in spending on farm income support, up from its latest forecast of $119.52 million for 2012-13, but well down from the 2012-13 budget of $226.29 million.

Operational spending on ag insurance in 2013-14 is budgeted at $429.1 million, down slightly from $429.83 million in the 2012-13 budget but well down from the province's latest forecast of $713.98 million in actual 2012-13 spending.

The province has budgeted $30.799 million in spending on the ag department's "environment and water" file, up from $29.96 million in the 2012-13 budget and forecast actual 2012-13 spending of $30.679 million. However, the ag department's target for spending on the same file in 2014-15 comes in somewhat higher, at $35.76 million.

Agriculture industry development funding is tapped for a more substantial increase in 2013-14, with spending estimated at $113.29 million, up from $95.59 million in the 2012-13 budget and forecast actual 2012-13 spending of $97.345 million.

The food safety and animal health file will also see an increase in spending in 2013-14 at $36.44 million, up from $35.38 million in the 2012-13 budget and forecast actual 2012-13 spending of $34.98 million. The file will see a cut in spending on "food chain traceability" to $5.09 million, down $2.89 million from the 2012-13 budget.

Spending on the overall food safety and animal health file in 2014-15, meanwhile, is targeted to rise to $41.26 million.

The province's overall 2013-14 budget calls for total operational spending of $38 billion, on operational revenues of $37.6 billion.

Horner said the budget freezes overall operating expenses with a "zero per cent" increase from the previous year, "well below" the expected population plus inflation rate of 4.3 per cent. The province expects a $6.2 billion drop in resource revenue from the previous budget's forecast for 2013-14 due to the "bitumen bubble."

The opposition Wildrose Party on Thursday criticized the budget as booking a $5.5 billion cash shortfall with $3.5 billion in new debt, $2 billion taken from the province's Sustainability Fund and over $200 million in debt servicing costs.