Given this situation (two and only two competing states), libertarianism is probably less viable. In the real world, however, you have a greater number of players.

If Libland has positive economic relations with other states (as most free people seem to prefer), it would theoretically have alternative sources of food from those allies. In addition, unless Libland's government had irrationally incited Xia's actions (theoretically, an unlikely choice for a free society), other states would see this a flagrant attack on Libland and come to its aid.

The example is certainly viable for a case where one state (out of over 200 in the real world) has a monopoly on producing any essential good, or where Xia's military is more powerful than the combined strength of all potential opposing states. I don't think the example extends beyond those corner cases, however.