Alberta Agriculture is reducing its financial support of the non-profit organizations this year by $2 million each.
They have been getting about $10 million each annually from the government to support the fairs and exhibitions they put on.
Associate Agriculture minister Everett McDonald said the Stampede and Northlands help teach people in urban areas about life in rural Alberta.
But the organizations must share some of the $16 million in cuts to the department.
"These are just difficult times," he said Monday. "We are asking everybody to just be more responsible and look for other (funding) sources."
Tim Reid, president of Northlands, said the organization was surprised by the 20 per cent cut.
He said it was no secret the province was in financial trouble, but Northlands was expecting a reduction of between five and 10 per cent.
The organization will have to reduce some of its programming and hire fewer part-time staff for major events such as Farm Fair International.
"We are certainly caught off guard by the size of it. We just simply won't be able to deliver as much as we have in the past."
Kurt Kadatz, a spokesman for the Calgary Stampede, called the budget cut "significant".
He said the Stampede management team is working on cutting costs in the short-term without affecting major events such as the chuckwagon races or the rodeo.
Kadatz declined to give details about whether the cuts will affect jobs or other programs.
"People will see a great mix of the programming that we usually deliver," he said.
"I think folks will experience — I don't want to say the same Stampede — but they will experience Stampede just like they always have."
He said organizers will have to come up with a longer term strategy to determine what the Stampede can and can't do as a not-for-profit organization.
Other significant changes to Alberta Agriculture include a $4.8 million reduction to the Alberta Livestock and Meat Agency to $32 million.
The provincial agency's task is to help the industry become more profitable and internationally competitive through marketing, research and bolstering production.
McDonald said the cut shouldn't have a big effect on the agency.
"This was not a huge surprise to them."
The budget calls for the elimination of 40 jobs at Alberta Agriculture.
About half the staff affected work at the Agriculture Financial Services Corp., a provincial Crown that provides farmers and businesses with loans, crop insurance and farm income disaster assistance.