To be more accurate - by removing subsidies, NZ farmers became more efficient and sell their products at the world price, which is quite often overseas.
Subsidies and/or tarrifs always distort the market and have unintended consequences.
Not sure why you say 'more accurate'. What you state is what I implied. I hope this was clear.
What removing subsidies do is unleash the potential. Lots of farming communities that live with subsidies are convinced that removing them is a dooms day scenario.
However evidence often doesn't support this. Japan used to protect its market for beef. Then this was forced to be opened by the US. Japan farmer then realized that their specialization was high quality beef. And now Japan is globally famous and exports lots of high quality beef.
Removing subsidies can lead to structural changes and consolidation, but it can also have lots of positive effects.
Does it pencil out though? You go from more farmers making less profit and getting subsidy to smooth things over and then they go ahead and spend most of that back in the economy running the business presumably.
And the other situation is no subsidy, fewer players as they have to take what little profit there is and spend it more on overhead, and presumably less money reinvested in the local economy overall because of less economic activity from fewer players as well as that subsidy no longer being available to spend back on overhead and recirculate into the economy. And profit is presumably held by fewer and wealthier people who spend even less proportionally in the local economy than someone with less means.
That's only true if you ignore that the government can spend that money on something else. And the successful farmers are actually net tax payers.
Compare subsidies to farmers, all farmers are highly inefficient farming with no exports. No great public transport system and roads with potholes.
To:
No subsidies. Highly efficient farmers that export. Fantastic bus connection and roads in the whole countryside.
> take what little profit there is
Before there was no net profit at all, it was a net lose to society. You were moving profits from other sectors to the farm sector.
> And profit is presumably held by fewer and wealthier people
If a farmer is successful, they should make money, just like people in all other sectors in the economy.
Nobody makes the argument that we should subsidize all manufacturing, so that we can have lots of small relatively poor manufacturing sites that lose money.
This if course doesn't necessarily work for every country, but the general doom and gloom about subsidy is often proven wrong.