Lower prices and rising input costs make it unlikely farmers will top 2012 this year.

University of Idaho agricultural extension economists Garth Taylor and Paul Patterson have delivered their farm industry outlook to the House Agricultural Affairs Committee of the Legislature.

Patterson says gross farm receipts climbed 4 percent in 2012, to $7.7 billion. Livestock sales, which include both beef and milk, increased 8 percent, to $4.3 billion; crop sales were up 5 percent, to $3.4 billion.

That ranks Idaho as the No. 3 agricultural producer in the West, Taylor says, behind California and Washington.

"We surpassed Colorado last year, and we're breathing down Washington's neck," he says.

Farmers also set a record for net farm income. Patterson says the ongoing drought in the Midwest accounted for much of that, by keeping commodity prices at very high levels, but public investment in agricultural research also contributed.

The total value of Idaho's dairy production, for example, has increased 142 percent over the past several decades, despite a 32 percent decrease in real prices.

"A lot of that is because of the increased productivity of cows," Patterson says. "It's the same thing with potatoes: There's been a small increase in acres (planted) and prices are down, but yield and production are up. It shows the importance of investing in research."

Government payments were not a factor in last year's performance, he says. They account for only 2 percent of total cash receipts, and total payments dropped 15 percent last year, to $97 million. That's the first time they've been below $100 million since the early 1980s.

Just as net income set new records, so did farm expenses, Patterson says. Total farm costs surpassed $6 billion last year, and he expects them to rise 2 to 4 percent in 2013. Combined with lower commodity prices, he's projecting a 10 to 15 percent decline in net income this year.

"Part of that is predicated on not having the Midwest drought drive up prices," he says. "And from a global competitive standpoint, I think we're going to see more production."

And when commodity prices dip, Patterson says, it's unlikely that input costs will decrease, or if they do, that they'll decrease enough to offset the price drop.

Taylor's outlook is a little more optimistic.

"Milk accounts for one-third of our total farm revenues and beef is 25 percent," he says, so healthy milk and beef prices could keep overall receipts at record levels for a fourth consecutive year.

Based on total sales, Taylor notes, agriculture ranks as the largest sector in Idaho's economy.

bspence@lmtribune.com(208) 791-9168