Many of the wild flowers that brighten the Scottish countryside are disappearing because politicians and farmers are failing to protect them, a new report warns.

Colourful plants such as corn marigolds, field gentians and wild pansies are in serious decline, as are the insects and birds that such plants support, including marsh fritillary butterflies, great yellow bumblebees, lapwings and curlews.

The pesticides and monoculture crops favoured by large-scale industrial farmers are destroying the natural diversity of the countryside, the report said. It is demanding the reform of rural support funding to encourage farmers to help wildlife.

The report on Scotland's farmland is being published this week by conservation group Plantlife, to coincide with the Royal Highland Show at Ingliston near Edinburgh, one of the highlights of the agricultural year.

The report argued that plants are being wiped out by the "simplification" of the landscape caused by intensive, specialised farming. The number of wild cornflowers has dropped by 99% over the last 40 years, it points out, and arable flowers are declining faster than any other group of plants.

Between 1998 and 2007 the area of enclosed, improved grassland in Scotland increased by 9 per cent but the richness of its plant species fell by 8 per cent. The number of plant species in the more extensive rough grazing land has also declined.

The loss of plants has serious knock-on effects for insects and birds, the report said. It pointed out that flowers support an extraordinary range of insects – the bird's foot trefoil helps 132 invertebrates, including burnet moths and small blue butterflies. Plants are also vital for pollinators such as bees and butterflies, can help clean soil and water, and reduce the risks of flooding. They are also important for birds including lapwings, numbers of which have crashed by more than 50% in the last 10 years.

"Without wild plants, our productive lands could not be productive," the report said. But it acknowledged that wildlife benefits will have to be paid for.

The system of subsidies under the European Common Agricultural Policy (CAP) sees 20,000 Scottish farmers getting a combined total of about £575m a year. The payments are heavily weighted in favour of richer, intensive farms in the east of Scotland, and against poorer, less intensive farms in the north-west, like crofters. According to Plantlife, only 18% of rural development funding has been spent on improving the agricultural environment.

Deborah Long, the group's programme manager in Scotland, said: "Scotland's wild plants and fungi have largely been failed by agri-environment schemes.

"Plantlife is calling for scheme options that enable farmers to provide space for them within and between farms. We want to see these benefits maintained through access to targeted, longer-term support, so future generations can also enjoy Scotland's wild plants and fungi."

The group is also calling for an advisory service for landowners and managers to help them boost wild flowers on their estates.

The report concluded: "Unless we ensure that agri-environment schemes are funded sufficiently to provide support to farmers in areas where the richest biodiversity is found, we run the risk of losing all those benefits that Scotland's farmland can provide."

The National Farmers Union in Scotland (NFUS) accepted there were areas where farmers and conservationists were unlikely to agree, but stressed its willingness to work together to secure better funding.

Andrew Bauer, NFUS environment and land use policy manager, said: "While NFUS continuously pushes for better environmental regulation and a good deal from the next CAP, we're more likely to secure a better deal for Scottish farming if we can harness the power of the environmental lobby."

The Scottish Government stressed that agri-environment schemes were important to maintain the biodiversity that contributed to Scotland's "iconic" scenery. Ministers were pushing for "a fairer share" of CAP funding for Scotland to enable more money to be spent on rural development.

A spokeswoman said: "We are currently consulting on proposals to introduce improved targeting of support. This will help to ensure that funding is targeted to the locations where agri-environment management will deliver the maximum benefit."