Kyuubey is a more difficult foe. But the simple existence of a grief supply chain and witch reclamation doesn't threaten his model as far as I can tell. The amount of grief he collects directly from us would exceed the amount he normally gets from grief seeds (due to people using magic more freely); the number of girls who contract would probably be about the same, and the proportion who witchout due to stress would probably be only slightly lower. Many fewer girls would witchout due to starvation, but that number would be more than offset by the number who witchout (from stress) multiple times. The net result is more energy for Kyuubey, much longer lifespans for meguca, and less worry about starvation. I wouldn't feel terribly confident relying on this observation, though. Kyuubey might see things differently or have other problems with the system that I didn't anticipate. One possible issue is that this model makes the masquerade (ultimately) unsustainable due to the huge number of meguca that would end up existing. I'm not really sure why Kyuubey wants to have a masquerade in the first place, though, so I don't know how this would affect his decisions.
Once we implement a supply chain, it will protect everyone within its range from starvation (even if there isn't a steady supply of witches), since we would still offer free cleanses of soul gems from our remote locations; it's only the grief seeds themselves that we would do trades for. People with grief seeds would have more options (e.g. they could live farther away from the distribution points), but nobody would need to starve.