Damon Watson is a fourth generation cattle rancher in rural Oklahoma, and his son and daughter hope to be the fifth. In recent years, however, it has become more difficult to envision that future: The profitability of the farm has fallen and opportunities in Council Hill, a town 60 miles south of Tulsa with slightly more than 100 people, continue to dry up.

Even as consumers pay more for meat at grocery stores, ranchers like Watson have struggled to earn a high enough price for their cattle from meat processors. He’s seen...