And if your local agricultural industry can't survive without subsidies, you should really be doing other things than farming. Peak oil is not an energy crisis. It is a liquid fuel crisis.
Since most developed countries consider food independence as worthy to defend, they subsidize their own agriculture. The end result is that any local farming sector needs subsidies to survive, and even more to develop and become more productive.
Of course, thanks to the Washington consensus which followed more or less the principles you put forward, agricultural development was stuck, and even reversed, for much of the 80's and 90's. And, well, famines happened. Auferre, trucidare, rapere, falsis nominibus imperium; atque, ubi solitudinem faciunt, pacem appellant.
