Kiwi Fruit for America explains what happened when New Zealand ended its agricultural subsidies:
Without subsidies, fertilizer use decreased, water quality increased, and yields were not affected. Additionally, farmers fit their production to the land. Marginal land, which was only farmed to receive subsidies, went out of production and reverted to native bush.Competition also drove innovation, and farm productivity improved substantially. Labor productivity nearly doubled, and land productivity increased 85 percent. Lamb carcass weights rose 34 percent, and the quantity of milk solids produced per dairy cow increased by more than 30 percent.
Annual productivity gains before reform were about 1.5 percent. For the first 9 years after reform, they averaged 6 percent — higher than any other sector in the country’s economy.