The county developed rather quickly during the early twentieth century, however, as old ranchland was divided up and sold to farmers by land developers. From 1906 to 1912 the Coldren Land Company and the Vaughn Land Company held promotions in Bailey County. Midwestern farmers took special excursion trains to nearby Farwell, then were taken south and shown Bailey County lands selling at ten to twenty dollars an acre. In 1909 the county's first irrigation well was dug. By 1910, seventy-one farms had been established in the county and the population had increased to 312.

In the early 1990s the county had 160,000 acres of irrigated lands and was among the leading counties in agricultural income. It has been said that Bailey County "is one of the few areas in the United States that can produce varying crops such as cotton, wheat, corn, grain, sorghums, soybeans, castor beans, hay, peanuts, cabbage, lettuce, peas, and beans." About 40 percent of agricultural receipts derive from livestock. Manufacturing income in 1980 was almost $2 million, from farm tools.

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During the 1920s and 1930s new conditions helped to transform the county's economy from ranching to farming. Ground water was discovered at depths of twenty to forty feet, and large ranches were broken up and sold as farm tracts. Both the Watson Ranch and the Newsome Ranch, for example, were subdivided in 1924 and 1925. While many of the new farmers grew wheat, corn, and forage crops, a rapid expansion of cotton farming was responsible for much of the development of the county during these years. In 1920 little if any cotton was grown in the area, but by 1929 over 24,000 acres was planted in cotton and it had become the county's leading crop. The first cotton grown in the area was sent to Plainview for ginning; but Bailey County got a gin in 1923. By 1924 there were 302 farms in the county, and by 1929, 758 farms had been established there. The expansion of cotton farming continued in the county even during the years of the Great Depression, qv when cotton farming in other parts of the state suffered severe declines. By 1940 cotton production in Bailey County took up almost 45,000 acres, and the number of farms had increased to 820. Because of this growth, the population of the county rose significantly during this period. The population in 1930 was 5,186, and 6,318 people lived there by 1940. Though many West Texas counties declined in the years immediately after World War II, qv Bailey County continued to grow in population until the 1960s. In 1950, 7,592 people lived there, and by 1960 residents numbered 9,090. But the population declined thereafter, to 8,487 in 1970, 8,186 in 1980, and 7,064 in 1990.