The amount consumers will be paying for food at the grocery store could jump this year, but rising farm incomes won’t be the biggest factor in that increase.

The latest report from the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri shows there will be good farm incomes in the U.S. this year … a record $99 billion in 2011 … but it won’t be the biggest driver in an expected 4 percent increase in consumer prices. FAPRI’s director, Pat Westhoff, that distinction belongs energy costs.

“[High oil prices] are probably the biggest reason for the year-to-year changes. The higher energy costs we’ve seen in recent months do increase the cost of transporting and processing the food. And those are a big share of the overall consumer food dollar.”

Westhoff points out that while the amount of money American farmers will be making this year will increase, still only about 20 cents of every food dollar goes back to the people who grow and raise that food.

Westhoff says crop producers should have a good 2011, with livestock producers getting more of a mixed bag. “The positive is we have seen higher prices for cattle and hogs. But they’re also facing much higher feed costs this year.”

He adds that strong international demand for U.S. farm products will buoy the ag sector with cattle prices expected to go up and tightening corn stocks, helped by advancements for the ethanol and biofuels sectors, will keep those prices higher as well.

Westhoff cautions farmers that FAPRI doesn’t have some kind of crystal ball, and producers should expect some volatility.

“If you’re a producer or someone using agricultural products, you’re going to want to be very active in risk management these days to make sure that you’re able to handle different contingencies that might come up over the course of the next couple of months.”

Listen to my entire conversation with Westhoff here: Pat Westhoff, Director, MU FAPRI