The EU and the US are known for having an amazingly complex set of subsidies for their agricultural products, designed to make sure a stable chain of food supply exists within their region.
Are there any major stable countries (population over 5 million) where there are no forms of agricultural subsidies of any kind? And if so, how does the agricultural industry survive there?
New Zealand comes close. They eliminated almost all their farm subsidies in the 1980s. New Zealand is a developed nation with population just under 5 million.
New Zealand is a country of about 4.6 million people without much of a domestic market for products such as milk, meat, and wool. However, New Zealand produces enough food for 40 million people, Petersen says, and, unlike the U.S., exports about 90 percent of its production.
Any nation net exporting food can reasonably eliminate agricultural subsidies. The main argument made for agricultural subsidies is that if war cuts off trade, people will need farmers to produce enough food for subsistence. If a country is a net exporter of food, that reason simply doesn't apply. Farms are just like any other business, they don't need government handouts to operate at a profit and New Zealand has been proof of that.
Still, the sudden removal of government support had less impact than expected. Only about 800 farms, or about 1 percent of total farms at that time, took the exit grant, he says.
The exit grant mentioned was a government program designed to help farmers who couldn't be profitable in a post-subsidy nation transition out of agriculture.
New Zealand has reintroduced irrigation subsidies as of 2017.
The reason most major nations subsidize agriculture: food is the most strategic resource of all. Let there be a shortage of food, and the populace becomes very agitated. Hunger pushes people to do things they wouldn't normally do, like rise in rebellion. Humans can survive without a lot of things, but food is definitely not one of them.
All nations protect their internal agriculture, as a strategic initiative. A nation that depends on imported food becomes very vulnerable to an antagonist in times of conflict... if the antagonist can cut off those imports. The UK was very nearly put in that position during the Battle of the Atlantic - it was down to two weeks of food for its citizens at one point.
The only nation I could find that does not have agricultural subsidies is New Zealand. It is in a somewhat unique position, though. NZ has been a pacifist nation, partially out of desire, and partially out of happenstance - it is somewhat remote, doesn't dominate any major trade routes, or produce great amounts of strategic materials, so there is little reason for another nation to attack it, and little benefit to another country if they were to do so. Nor does NZ have a rapidly growing population, turning farms into subdivisions and industrial parks, and threatening their agricultural output.
Also, agriculture isn't like a factory. It can't be just stopped and started. A farm that has been fallow and unused for some time takes a few years to return to full productivity, whether that farm produced crops or livestock. So it is in the best interests of all nations to keep what farms they have productive.
Today, in the US, the bulk of agricultural subsidies consist of price supports. The government sets a price that it will buy agricultural goods, calculated to keep the farms producing, and private businesses have to pay more than that if they want the produce. In good years, the government buys very little. In rough years, they buy a lot.
Government purchased food often goes to famine stricken areas, such as parts of Africa. In one case when the cheese market tanked in the 80's, the government ended up buying a whole bunch of this perishable material on the price support program and giving it out to people on welfare... the Government Cheese meme.
Besides direct subsidies government grants, equipment, indirect subsidies can be in the form of incentive like tax rebates, low-interest rates, R&D incentive, etc. The efficiency of subsidies is subject to debate. I.e. in a corrupted country, subsidies rarely reach the needed hands.
Are there any major stable countries (population over 5 million) where there are no forms of agricultural subsidies of any kind?
According to the definition of subsidy, the short answer is: No.
Bear in mind that: Advanced of agriculture technology for food security is way beyond the limit of "free market". Since the free market is all about profits, there is always unfair game such as monopoly, sanction, etc.
In addition, the agriculture business is highly susceptible to climates and diseases. An outbreak; drought; etc can destroy the agriculture worker income for the whole season.
I see there is an answer on New Zealand dairy industry, which needs scrutinize on details, e.g. "rainy days funds", incentives, low-interest loans, etc.
There are no government subsidies to agriculture in New Zealand. The reference above to ‘rainy day fund’ if it exists would be a dairy co-operative matter agreed to by members of that co-operative. Nothing to do with government. The reaso why NZ has no government subsidies is because it is a very efficient producer of agricultural products
