Land and Water Australia, a rural research agency that receives $13 million a year from the Government, will be axed next month, reducing funding for studies into sustainable agriculture and management of natural resources.

The corporation's achievements included identifying the risks of sex-changing chemicals in Australian waterways, working with the cotton industry to eliminate pesticide pollution and developing controlled traffic farming systems to improve soil health and productivity.

The professor of farming systems at Charles Sturt University, David Kemp, said the Government's plan was a "shock" because there was already insufficient funding for such research and development.

"Agricultural R&D always has a lot of public benefits.

"The important environmental issues that farmers would like to know more about managing, need public funding," he said.

The natural resources commissioner of NSW, John Williams, said land and water research was required "now more than ever" to find sustainable ways to increase food security, water supply and the resilience of the Australian landscape as the climate changed.

"Our research effort in this area of science is already declining," Dr Williams said.

"I just hope the Rudd Government understands how critical this knowledge is to our future wellbeing."

It is believed that some research funded by the corporation may be completed by other institutions or the Department of Agriculture, Fisheries and Forestry.

The vice-president of the National Farmers Federation, Charles Burke, said farmers were angered by the decision.

"The Government has been saying for quite some time that climate change is one of the biggest risks agriculture in Australia will face, and here we have money for R&D on mitigating the impact of climate change being cut significantly."

The Rural Industries Research and Development Corporation will lose $3 million from its $13 million annual budget.