EU farming subsidies are to be replaced by fund linked to efforts to combat climate change, the environment secretary is set to announce at a conference today.

Speaking at the Oxford Farming Conference, Theresa Villiers will confirm that the Government’s landmark Agriculture Bill will be introduced this month to Parliament, which will replace the Common Agricultural Policy.

She is expected to say the new scheme "will be one of the most important environmental reforms for 40 years" and set the standard for climate change action across the world.

The bill will put forward a new approach where farmers and land managers are rewarded with public money for ‘public goods’ – such as enhancing biodiversity, tackling climate change and raising standards of animal welfare.

However, the president of the National Farmers' Union has argued that the government has not gone far enough to help farmers protect the environment so far and pointed out that little has been done to mitigate flooding, which has significantly reduced crop yields.

The new funding will come after a seven-year transition period for farmers, who will see Direct Payments gradually phased out.

Ms Villiers will say: “We want our new scheme to deliver value for money as well as boosting sustainable productivity to support farmers in their work of feeding the nation.

“Our proposals for Environmental Land Management will be one of the most important environmental reforms for 40 years.

“The process we are about to embark on will, I hope, provide an example to others around the world of what can be achieved if we rethink how we manage the land and produce our food.

“We have the potential to create a virtuous circle between agriculture, tackling climate change, protecting biodiversity, and securing investment in our rural economy.”

Minette Batters, the president of the NFU, is set to challenge Theresa Villiers at the conference credit: PA

To provide support to farmers in the lead up to, and during, this transformation, the Environment Secretary will confirm the Government will guarantee the current annual budget for farmers in every year of the Parliament.

She will also promise to maintain food and farming standards after we leave the EU, adding: "We can maintain and indeed enhance UK standards as we negotiate new trading relationships with friends and neighbours in the EU and leading global economies."

NFU President Minette Batters will say to the environment secretary: "One year ago, I declared that British farming could achieve net zero by 2040. The defining factor to reach that goal and help tackle climate change is a willing Government.

“To reach our sustainability goals, we need to see a Government join British farmers on their mission to be the most sustainable farmers in the world. We stand ready to work with them to make that happen.”

She will urge the government to invest in water infrastructure and flood mitigation, adding: “This needs to be backed in legislation by the Agriculture Bill – which will be so significant for our industry. But I can’t discuss future farming policy without mentioning water. Right now, potentially 50 per cent of our potato crop is still in the ground and only a third of winter crops are planted. This not only reminds us of the unique volatility farmers have to manage year-on-year, but it also masks the fact that we face huge challenges in managing water in the years ahead.

“The first domestic agricultural policy in over 70 years must address how we manage water in this country. We are currently wasting one of our most precious natural resources and we need a revolutionary approach to how we plan, protect and pay our farmers to store water."

Rob Percival, Head of Food and Health Policy at the Soil Association, also warned about the potential environmental implication of the plans, adding: “The commitment to ‘sustainable productivity’ is also promising, though urgent clarification is needed on what this means. If ‘productivity’ is poorly defined, it could damage the natural environment and undermine efforts to tackle climate change. The Agriculture Bill must ensure that the climate and nature are fully incorporated into productivity payments. This should incentivise agroecological and nature-friendly farming.”