Agriculture Industry Grows Texas Farms, Ranches Cultivate the State's Economy

By Lisa Minton and Astrid Alvarado Published October 2022

Agriculture is a big part of the Texas economy. Farming and ranching operations can be found in every corner of the state, from citrus crops in the Rio Grande Valley to cotton in the High Plains — and in between, there are rice paddies in the Coastal Plains, sheep and cattle ranches in West Texas and timber harvesting in the Piney Woods of East Texas.

Agriculture existed in Texas long before European settlers arrived. Caddo tribes in the eastern part of the state grew corn, beans and squash, as detailed by the Texas State Historical Association. Pueblo tribes in the west not only cultivated food crops but also grew cotton and developed irrigation techniques. Early Spanish settlers introduced hogs, goats, sheep and cattle. As other settlers arrived, they established a variety of farming and ranching operations, ranging from small family farms to large cotton plantations and cattle ranches.

Since those early days, Texas agriculture has changed significantly. Advanced cultivation practices, improved seed varieties, mechanization and the introduction of electricity and paved farm roads have contributed to the modernization and expansion of the state’s agricultural industry, which produced $24.9 billion in cash receipts in 2021 — about 5.7 percent of the U.S. total and the fourth highest among all states (Exhibit 1).

Exhibit 1: TOP 10 AGRICULTURAL PRODUCING STATES BY CASH RECEIPTS, 2021

Source: U.S. Department of Agriculture, Economic Research Service

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According to the U.S. Department of Agriculture (USDA), Texas has 247,000 farms — 12.3 percent of the U.S. total and by far the most of any state (Exhibit 2). (The USDA defines ranches as types of farms and includes them in the count.) Our 126 million acres of farmland (PDF) is 14.1 percent of the U.S. total and more than twice that of second-ranked Montana.

Exhibit 2: FARMS AND ACRES OF FARMLAND IN THE U.S., TOP 5 STATES, 2021

Source: U.S. Department of Agriculture, Economic Research Service

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One of the reasons that Texas has so much more farmland than other states is that the USDA defines ranches as farmland — nearly 70 percent of Texas’ farmland belongs to our state’s ranches. The USDA’s 2017 Census of Agriculture, a survey conducted every five years, estimates the percentage of Texas farmland acreage by use:

• PASTURELAND, 69.8%
• CROPLAND, 23.3%
• WOODLAND, 5.8%
• OTHER, 1.1%

California has bigger receipts than the top five, despite fewer farms, mainly because its top crops — including grapes, tomatoes, lettuce, citrus fruits, nuts and berries — tend to be very profitable per acre, and California is one of the few states in the U.S. with suitable conditions to grow them.

The 2017 USDA census (PDF) also estimates that of the 408,506 Texas agriculture producers, 61.8 percent were male, and 38.2 percent were female. The average age of all Texas agriculture producers is 59.2 years old, 1.7 years older than the national average.

Top Commodities and Exports

As might be expected, cattle are Texas’ top agricultural commodity with a 40.4 percent share of cash receipts — more than three times that of milk, the second highest. Texas’ top three agricultural commodities — cattle, milk and broilers — represented nearly two-thirds of the state’s total agricultural cash receipts in 2021 (Exhibit 3).

Exhibit 3: TEXAS TOP 5 AGRICULTURAL CASH RECEIPTS BY COMMODITY, 2021

Source: U.S. Department of Agriculture, Economic Research Service

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The USDA valued Texas agricultural exports at $5.8 billion in 2020, the sixth highest total in the U.S., following California, Iowa, Illinois, Minnesota and Nebraska (ranked first through fifth, respectively). Texas’ top five agricultural exports were:

1. Cotton ($1.7 billion; ranked No. 1 among all states).
2. Beef and veal ($1.0 billion; ranked No. 2).
3. Other plant products ($520.9 million; ranked No. 7).
4. Dairy products ($437.8 million; ranked No. 4).
5. Feeds (corn, sorghum, barley and oats) and other feed grains (such as hay and alfalfa) ($320.1 million; ranked No. 9).

According to a 2019 study (PDF) by the Center for North American Studies at Texas A&M University, Canada and Mexico were the top foreign markets for Texas agricultural products in 2018. Total economic activity for Texas agricultural exports to Canada and Mexico was valued at more than $3.7 billion and supported 22,972 jobs.

Texas agricultural exports to Canada in 2018 totaled $903.3 million ($234.0 million in animal products and $669.3 million in plant products). The top three agricultural exports from Texas to Canada were:

1. Other horticultural products, such as cut flowers, live trees and other ornamental plants ($266.6 million).
2. Beef and veal ($97.7 million).
3. Food preparation products, such as cake mixes, gravy packets and dried pasta ($69.0 million).

In 2018, Texas exports to Mexico totaled $863.3 million ($344.1 million in animal products and $519.2 million in plant products). The top three agricultural exports from Texas to Mexico were:

1. Cotton ($139.4 million).
2. Beef and veal ($138.7 million).
3. Other horticultural products ($82.8 million).

Economic Impact

The agriculture industry in Texas involves more than just growing crops and raising animals; it includes many other economic activities that form the supply chain between farm and consumers. Called the “food and fiber system,” it is the sector of the U.S. economy that comprises all economic activities supporting or utilizing agricultural production.

The food and fiber system includes machinery repair, fertilizer production, food processing and manufacturing, transportation, wholesale distribution, retail sales and eating establishments. It also includes fabric, clothing and footwear that are produced from plant and animal fibers or hides. Certain financial, real estate, warehouse, transportation and other services related to agriculture, as well as labor, also are included in the wide array of inputs used to measure agriculture’s contribution to the economy.

Texas A&M University’s AgriLife Extension Service measures the economic impact of agriculture by determining its contribution to the state’s total gross domestic product (GDP). AgriLife estimated that in 2019 the Texas food and fiber system contributed $159.3 billion, about 8.6 percent of the state’s total GDP (Exhibit 4).

Exhibit 4: ESTIMATED CONTRIBUTION OF THE FOOD AND FIBER SYSTEM TO THE TEXAS ECONOMY, 2019

Note: Manufacturing includes the following industries: food, beverage and tobacco products; petroleum and coal products; wood products; paper products; chemical products; furniture and related products; nonmetallic mineral products; textiles and textile product mills; apparel, leather and allied products; and machinery. Totals may not add due to rounding.

Source: Texas A&M University AgriLife Extension Service

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Nationwide, the food and fiber system’s share of the economy is less than in Texas. According to SelectUSA, agriculture, food and related industries contributed $1.1 trillion — a 5.2 percent share — to the U.S. GDP in 2019.

Challenges and Opportunities

Agriculture once required an enormous amount of labor to sustain production, but with modern capital-intensive practices and the increasing use of technology, agriculture has become much more productive while requiring a much smaller share of the labor force. While this economic transformation has resulted in greater food security and improved nutrition, today’s farmers and ranchers still face many challenges.

Broadband Access

Agriculture increasingly relies on technology in its business operations, and in today’s high-tech world, having access to broadband connections is more important than ever. Broadband is essential to the practice of “precision agriculture,” in which farmers use technology such as variable-rate input applications, GPS systems and remote sensors to perform soil mapping; operate irrigation systems; run autonomous machinery; and assist with data collection. These innovative techniques allow higher quality yields and increased efficiency of production.

Technology also helps some farmers reduce fuel and water usage, allowing for more sustainable operations. Additionally, an increasing number of farmers and ranchers are using wireless trackers to manage cattle and other livestock. This use of technology in agriculture, however, depends on access to a reliable broadband connection, and much of rural Texas remains without access.

According to a 2019 USDA study (PDF), 24 million Americans live in households without access to broadband, and 80 percent of them live in rural areas. In Texas, 25 percent of farms don’t have internet access. The USDA noted that adequate broadband infrastructure and other digital technologies in agriculture could add $47 billion to $65 billion annually to the U.S. economy.

The Texas Broadband Plan developed by the Broadband Development Office (BDO) includes the need to reach agriculture as an essential part of the effort to expand affordable, high-quality internet service statewide. The BDO, created by the Legislature in 2021, is in the Comptroller’s office.

Drought and Wildfire

Over the past year, most of Texas — 245 of its 254 counties at one point — has been struggling with the worst drought since 2011, significantly affecting agriculture. Cotton crops in the High Plains region, for example, have suffered tremendous losses: the entire production of dryland cotton and a significant portion of the irrigated crops. An August 2022 study (PDF) by Texas Tech’s International Center for Agricultural Competitiveness anticipates a 65 percent loss of total cotton production in the region, costing $1.2 billion in losses in economic activity, even with crop insurance.

With so much of Texas under drought conditions, wildfires pose a serious threat to the state’s farms and ranches, damaging or destroying crops, livestock, agriculture production facilities, barns and homes. Between December 2021 and August 2022, Texas A&M Forest Service crews responded to 1,725 wildfires burning nearly 600,000 acres. At time of writing, 118 counties have implemented burn bans, according to the Texas A&M Forest Service.

Food Security

Roughly one in every eight Texans faces food insecurity (limited or uncertain access to adequate food, as defined by the USDA), and the growth of Texas’ population highlights the need to address this issue. The state is expected to reach a population approaching 50 million people by 2050, and farmers will continue to play a crucial role in providing affordable and accessible food to Texans.

Over that timeframe, the USDA estimates that the global demand for food will increase by 70 to 100 percent, taking into account growth in population and a rise in incomes.

Tradition of Agriculture

Thousands of Texans run farms and ranches that have been in their families for generations. The 2017 Census of Agriculture (PDF) found that 97 percent of Texas farms were family farms.

In 2021, the Texas Department of Agriculture honored 57 family farms and ranches that have been in continuous agricultural production for a century or more. Many Texas families who have owned their farms for generations cite dedication to their community as a driving factor for their perseverance.

While farming can be demanding, Texas farmers cite resilience, responsibility and humility as values of working in agriculture. Additionally, some Texas farmers say farming has given them a greater appreciation for the land and the labor that provide crops and resources year round. Farmers with these values and work ethic will continue expanding and adapting their businesses to meet the changing needs of the public.

Outlook for Texas Agriculture

Today’s farmers and ranchers must be adaptable to changing conditions, including droughts, new technologies and the demand for more food as our population grows. They work hard to boost production (using often-limited resources) while meeting consumers’ changing tastes and expectations — and it is not an easy balancing act.

Farmers face many challenges. As more of the population moves to urban areas, affordable farm labor becomes more difficult to find. Water availability and soil conservation remain ongoing issues as do issues related to property rights and eminent domain. Texas farmers have remained resilient through it all, however, and their hard work as stewards of our land has made Texas a leader in agriculture and food exports. FN

Water management is essential to agriculture. Learn more about where your water comes from and how the state is ensuring there’s always enough with our Good for Texas Tour - Water Edition.