Agri-environment schemes (AES), as part of the European Union's Common Agricultural Policy, are intended to help prevent the decline of farmland biodiversity. Nevertheless, the ecological effectiveness of AES in supporting farmland bird populations remains inconclusive across studies. This inconsistency highlights a research gap: What behavioral mechanisms contribute to the variation in farmland bird populations? This variability may arise because farmland birds alter their habitat selection in response to available habitat—a phenomenon known as functional responses in habitat selection. Here, we examined the effects of AES and non-AES land-use variables on habitat selection of farmland birds, taking into account the species-specific functional response to availability. We built two types of hierarchical distance sampling models to analyze observational data of four farmland bird species from line-transect surveys during the breeding season in Saxony, Germany. First, we built mixed-effects models to estimate the marginal effects of AES and non-AES land-use variables on the occurrence of farmland birds. Second, we integrated linear models into the distance sampling model to relate habitat selection estimates to habitat availability. Results from the first mixed-effects model showed positive and negative effects of AES on habitat selection. In the second model, we observed inverse relationships between habitat selection and availability for both AES and non-AES variables. These results support the hypothesis of negative functional responses, as we found a decrease in the tendency of farmland birds to select both AES and non-AES land uses as their availability increased. Our findings suggest that the varying effects of AES on bird occurrences reported in the literature may depend on cross-study differences in AES availability. We propose that functional responses in habitat selection should be considered as a phenomenon in future AES research. Our study also highlights the importance of optimal AES provision and their spatial allocation in the agricultural landscape.