Data Sufficiency

the statement "2/3 are either cows or pigs" doesn't mean that there are either 40 cows or 40 pigs. it means that, if you take the cows and the pigs together, they constitute 2/3 of the animals on the farm.
in other words, cows + pigs = 40.
(i can understand your alternate reading of the problem statement; it's reasonable enough. just remember that the gmat is their playground, not yours, and so you have to play by their rules - so remember the way certain statements are written. as a postscript, i hope that future problems like this one will be purged and/or rewritten for clarity before they make it into the official question pool; it would be a shame if students miss the problem just because of its ambiguity.)

thus:

(1)
this means that there are at least 27 cows (because 27 cows, 13 pigs is the least # of cows satisfying this criterion).
that's all we know, though; there could be anywhere between 27 cows (and therefore 13 pigs) and 40 cows (and therefore 0 pigs).
insufficient

(2)
this means that there are at least 13 pigs, which means that there are at most 27 cows.
that's all we know.
insufficient

(together)
(1) says there are at least 27 cows; (2) says there are at most 27 cows.
so, there are 27 cows and 13 pigs.
sufficient

answer = c