How Texas counties compare to the rest of the U.S. for best places to farm

Farm Futures magazine recently released a ranking, looking at factors like return on assets and weather.

By Michael MarksMay 29, 2024 1:35 pm,

Even though year after year the suburbs eat up more farmland in Texas, there are still a lot of places where agriculture is the biggest driver of the local economy. But are there a lot of good places?

Farm Futures magazine recently ranked all the counties in the United States to determine the best and worst places to farm.

Bryce Knorr, contributing market analyst for Farm Futures, joined the Standard to discuss how Texas fared. Listen to the interview above or read the transcript below.

This transcript has been edited lightly for clarity:

Texas Standard: So the best and worst places to farm… That kind of seems to me like there may be some subjectivity in that assessment. What measurements did you use to make these rankings? 

Bryce Knorr: Well, actually, we tried to be as objective as possible. This is based on the most recent ag census data.

So the USDA does a statistical analysis, just like the census that is under the general population. And we looked at financial ratios. We looked at return on assets. We could basically measure to see how much income a farm produces based on its assets. We also look at how much sales those assets produced from the profit margin, which is how much of the sales were actually captured as profit.

Obviously, prices have a have a big impact. You know, prices are low. Income tends to be down. And then the thing that really played into 2022 – you have agricultural weather becoming a big factor and certainly with the long term drought that’s been affecting Texas and the rest of the western United States until recently. And Texas also has had a big cold snap in the holiday season of 2020 that damaged a lot of vegetable crops.

So to make sure I understand you fully, these rankings reflect bottom line – where in the country farmers are getting the most out of their investment. And within that, variables like climate, fertilizer, price, availability of water, all those things sort of figure into the end result. Do I have that right?

Right. And, you know, a producer and in one part of the country – for example, of a corn grower in the Midwest – did relatively well because we had record corn and soybean prices. However, if that same farmer was in an area that had drought like parts of Texas, so then, you know, even with irrigation, it becomes difficult to make a profit.

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When I look at the map that you made out of this data. I notice that Texas contains a lot of the worst counties in which to farm. Why is that? 

Well, yeah, we rank all of the counties and some counties had to be at the top and some had to be on the bottom. And of the counties in Texas that were towards the bottom, they tend to be the counties that were affected by that cold snap and also by the drought.

Also, we had a record cotton abandonment in 2022. So if you were a cotton grower, you know, you just didn’t get a crop to sell. And government programs, crop insurance only make up so much of that loss. The the rest of it, the farmer has to eat and he eats in the form of giving back some of his profits from earlier years, some of the equity in his farm.

So climate… You know, I think about the tropical storms, the multiple freezes that have occurred over the past five years, and of course, the multi-year drought. You see those as the biggest drivers – maybe not, price of land or just the cost of doing business in one state versus another?

Yeah, the land prices weren’t as big a factor in Texas. But, you know, we did have some counties that did quite well – they tended to be poultry counties and also milk counties. Texas does have significant poultry production, particularly in parts of the east.

And then the milk production in the northern part of the state was also very big in there. We had the record milk prices and that sort of would help the profitability there, even though those producers had to deal with high feed, as well as uncertain availability of fiber and high labor costs as well. So, yeah, it wasn’t all peaches and cream, but, you know, the milk counties did quite well.

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Are there other commonalities you find between the best places to farm – not just in Texas, but across the country?

Well, I think, generally speaking, again, asset values play a big role. That’s why livestock production, or at least certain types of livestock, tend to be better from a financial efficiency standpoint.

You know, that’s true especially for poultry/eggs, because they’re carrying over their assets so many times. But, if you’re a cow/calf producer, you know, it takes a long time first just to gestate a calf, and then to feed it til it’s actually ready to go as an adult, or at least ready to be sold so you don’t turn over those assets.

So again, some of the assets tend to be financially more efficient than others.

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