Comparing the best agricultural locations in Texas with the rest of the USA

Although Texas suburbs are eating up more farmland every year, there are still plenty of places where agriculture is the biggest driver of the local economy. But are there many good places?

Farm Futures magazine recently ranked all counties in the United States to determine the best and worst locations for agriculture.

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 lightly edited for clarity:

Texas Standard: Best and worst places to grow… It seems to me that this assessment could be subjective. What criteria did you use to rank this?

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

So the USDA does a statistical analysis, just like the census does, which is based on the total population. And we looked at financial metrics. We looked at return on assets. We were able to basically measure how much income a farm was generating based on its assets. We also look at how much revenue those assets were generating from the profit margin, so how much of the revenue was actually recorded as profit.

Of course, prices have a big impact. You know, prices are low. Incomes tend to be declining. And then there's something else that's played a big role in 2022: Weather in agriculture is becoming a big factor, and that's certainly true with the long-term drought that's been affecting Texas and the rest of the Western United States until recently. And Texas also had a big cold snap during the 2020 holiday season that destroyed a lot of vegetable crops.

So let me understand you correctly, these rankings reflect the bottom line – where in the country farmers are getting the most value from their investments. And variables like climate, fertilizer, price, water availability, all of those things go into the bottom line. Am I understanding that correctly?

Right. And, you know, a producer in one part of the country — for example, a corn grower in the Midwest — did relatively well because we had record prices for corn and soybeans. But if that same farmer lived in an area that was affected by drought, like parts of Texas, then even with irrigation, it's going to be difficult to make a profit.

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When I look at the map you created from this data, I notice that many of the worst counties for agriculture are in Texas. Why is that?

Well, yes, we evaluated all the counties and some counties had to be at the top and some at the bottom. And the counties in Texas that were lower down tended to be the ones that were affected by the cold snap and also the drought.

Also, we had a record loss in the cotton crop in 2022. So if you were a cotton farmer, you know you just didn't have a crop to sell. And government programs and crop insurance only account for part of that loss. The rest is up to the farmer himself, and he contributes by giving back some of his profits from previous years, some of the equity in his farm.

The climate… I'm thinking of the tropical storms, the multiple freezes over the last five years and of course the multi-year drought. Do you think those are the biggest drivers – maybe not land prices or just the cost of doing business in one state versus another?

Yes, land prices were not that big of a factor in Texas. But we had some counties that did quite well — those were more poultry and also dairy counties. There is significant poultry production in Texas, especially in parts of the east.

And then milk production in the north of the state was also very strong. We had record milk prices and that kind of improved profitability there, even though producers were struggling with high feed costs, uncertain fiber availability and high labor costs. So, yeah, it wasn't all rosy, but, you know, the dairy counties did pretty well.

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Do you find other similarities between the best growing regions – not just in Texas, but across the country?

Well, I think in general, assets play a big role, and that's why livestock production, or at least the production of certain types of livestock, tends to be better from a financial perspective.

This is especially true for poultry and eggs because they transfer their assets so often. But if you raise cows and calves, it takes a long time to get a calf to term and then feed it until it's mature as an adult or at least ready to sell, so you don't lose those assets.

Here too, some assets tend to be more financially efficient than others.

Anna Harden

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