AHDB has announced an end to annual levy funds provided to Red Tractor as it is now 'financially established and self sustaining'.
AHDB's board agreed this week that it was 'no longer appropriate' to provide this annual seed corn funding to the food assurance scheme.
The decision took effect from this financial year, but AHDB said future funding could be provided if specific projects were identified that would benefit levy payers.
Red Tractor said it was 'disappointed' in the decision, as it would force the scheme to 'reconsider advertising plans'.
The levy organisation has provided yearly funds to the food and farming assurance scheme since 2008.
But AHDB chair Nicholas Saphir said Red Tractor was now 'well established' and it no longer required AHDB’s annual financial support.
"However, AHDB has informed Red Tractor that it would continue to consider providing funds for specific work or projects," Mr Saphir said.
“In addition, where there are issues, AHDB will continue to ask the tough questions and use its independence and evidence-based approach to facilitate the finding of solutions between Red Tractor and its’ stakeholders."
AHDB has written to Red Tractor with numerous concerns raised by levy payers, including the effectiveness of the current assurance process.
The levy board also highlighted concern around grain imports and whether the controls in place for imported grain provide the same levels of assurance and clarity as those of Red Tractor for English product.
“Work on this issue is continuing and it remains a very high priority for some of our cereals levy payers," Mr Saphir said.
He added: “The industry is about to experience a period of considerable change and it is AHDB’s absolute determination to ensure that we are spending levy payers’ money in ways that deliver value."
Responding to the move, a Red Tractor spokesperson said: “Red Tractor is disappointed to learn of the AHDB board's decision to no longer provide annual funding.
"We are focused on delivering for our members and we continue to listen to them, sharing their ambition for greater promotion of British food and farming.
“Regrettably, the AHDB's funding decision means we will now need to reconsider our advertising plans, which we understand will come as a disappointment to farmers and the wider food supply chain.”
It comes as AHDB is currently encouraging farmers and growers to register now ahead of a spring vote on the organisation's priorities for next year.
In April, levy payers will have their say on the challenges they want AHDB to focus on and the services it will deliver for them in the future.
This follows AHDB winding down its horticultural and potato sector activities, after a majority of growers voted to end their statutory levies.