You seriously think that small shops would be competitive if there were no subsidies? No hygiene I could maybe buy, but it goes hand in hand with quality, and there is practically no regulation for that: it's self imposed by the consumer picking pretty produce.
The consumer learns very quickly what they like. Eat a good tomato, you’ll look for one next time. The local fruit shop was even a joke in Seinfeld, I believe.
The closing of the small grocery store and producer can be mostly attributed to regulation.
No. They can be attributed to not being able to compete against big chains despite heavy regulation in favor of small businesses.
Big chains can offer what the average consumer wants in greater variety and cheaper, at more places and longer hours. They can gauge prices, do better marketing, have better stock, and wage price wars. They have more power, and what's the purpose of that if not abusing it?
Less regulation would just mean even worse food and less small shops.
Chains have whole departments dedicated to compliance. They chew through any new regulation you throw at them.
I get my groceries from a tiny neighbor market here in Eastern Europe. Usually from women of surrounding villages. Their main worries are in this order: raising market space fees (these go to the city) and new checks and rules they need to follow.