In this verse, Allah is speaking about His dominion over nature on the greatest scale. When Allah says: "There is no creature on Earth", He is referring to terrestrial life in general. The meaning is that if Allah did not provide sustenance for Earth's creatures, then life on Earth would come to an end. This does not mean that Allah provides for each and every specific creature on Earth all of the time.
Mujâhid explains this verse as follows: "Whatever sustenance a creature receives is from Allah. It is possible that He will withhold His sustenance from a creature, and as a consequence it dies of starvation."
There are numerous verses that discuss the general scope within which this verse can be understood. Allah says: "Can't they see that Allah makes His provisions bounteous to whom He pleases, and (likewise) narrows it?"
Allah also says: "Don't they know that Allah makes His provisions bounteous to whom He pleases, and (likewise) narrows it?"
These verses tell us that all sustenance originates with Allah. This does not mean that Allah never withholds sustenance from some of His creatures, just like He makes His providence more plentiful for some creatures than He does for others. All of this is according to Allah's timeless wisdom.
This is not at all a problematic concept. It conforms to the dictates of the sacred texts and those of common sense. Everything in Creation is created by Allah. He is the Lord and master of all existence.
When Allah says: "…its sustenance is upon Allah" we cannot understand from this that there is any obligation on His part. He provides for His creatures from His grace. He provides and withholds according to His decree. There is no way anyone can judge or second-guess His decision or question why He does what He does. His wisdom is unlimited and beyond our narrow powers of critique.
This is why He begins the first verse of Sûrah Hûd with the words: "(This is) a Book, whose verses are made decisive and then expounded, from the Wise, All-aware." [Sûrah Hûd: 1]
Every creature has its provision set out for it by Allah's decree, however great or small that provision might be. No creature dies before its appointed time, and that time does not arrive until it receives its full provision as decreed. This means that a mammal that dies in infancy when its mother's milk fails – it too has received the provision decreed for it and died at its appointed time. All of this is part of Allah's greater wisdom, and Allah knows best His purposes.
Allah's wisdom is vast. Our minds might apprehend some aspects of His wisdom on some occasions, but our rational faculties are too limited to comprehend everything This is why Allah says: "Allah decides, and there is no one who can reassess his decision. And He is swift in judgment."
A Few Lessons for Humanity:
On the human level, we draw form all this the lesson that wealth and poverty, satiation and hunger, are like all the other afflictions that Allah tests human beings with. This emphasizes to us that the life of this world is not the end. It is not the final goal of existence. It is only the beginning. The world is provided as a test to distinguish those who obey Allah from those who do not – to set the righteous apart from the sinful and to give those grateful a chance to excel those who are thankless.
Allah tells us: "Indeed, we created the human being from a drop of mixed fluid and try him, making him a seeing and hearing being."
Allah provides all the natural causes and effects by which His sustenance is realized on Earth. As far as human beings are concerned, there are some who avail themselves of these causes and others who neglect to do so. Allah tells us: "He is the one who subjected to you all that is on Earth."
He also tells us: "He is the one who made everything on Earth subjected to you, so travel the lands and eat of its sustenance. To Him is the return."
We are commanded to avail ourselves of the natural laws that Allah places in nature, just like we are supposed to obey the laws Allah places upon us through His commandments and prohibitions. For instance, if we want to enjoy a bountiful harvest, we must cultivate the Earth. Then, if we wish to attain piety, we need to obey Allah, avoid sin, and rely on Him for the outcome of our efforts. Ultimately, our provision is from Allah, but we are supposed to make an effort for it.
And Allah knows best.