High yields and prices for many types of crops and livestock combined to boost Oregon's net farm income in 2011, a state official says, but labor costs continue to be the single largest expense.

"The cost to pay farm employees -- largely because we have so many specialty crops that require hand-harvesting -- is the single largest expense for Oregon farmers," Brent Searle, analyst with the Oregon Department of Agriculture, said in a press release. "Last year, it topped $1 billion. In fact, overall labor costs continue to be higher in Oregon than net farm income."

"It's not just payroll," said Katie Fast, director of government affairs for the Oregon Farm Bureau. "It's payroll taxes and workers compensation."

Oregon's minimum wage also automatically increases each year based on inflation. Next January it goes from $8.80 to $8.95 an hour.

In spite of that, Oregon's net farm income was nearly $1.03 billion in 2011. That's up from $519 million in 2010 and is close to 2004's record high of $1.14 billion, according to the USDA Economic Research Service.

Neighboring states have much higher net farm income compared with Oregon's.

Washington's net farm income grew to nearly $3 billion, Idaho increased to $2.4 billion, and California continues to lead the nation in net farm income at $16.3 billion.

Nationwide net farm income increased from $80.4 billion in 2010 to $117.9 billion in 2011, a jump of nearly 47 percent, according to the Economic Research Service.

"On the whole, we are doing better, and that's the good news," Searle said of Oregon. "But the income gains are not spread across all producers. The average farmer in Oregon last year earned $27,000, even with an overall net farm income for the state exceeding a billion dollars."

Crop production in 2011 jumped to more than $3.3 billion, an increase of about 23 percent, while the value of Oregon livestock production was more than $1.3 billion, an increase of about 18 percent.

"Beef and dairy had good prices last year," Searle said. "The value of beef production was up 34 percent and up 28 percent for dairy products."

Crops did well, too, he said.

"Wheat set a record high in sales at more than $466 million, which was a 53 percent increase from 2010," he said. "Other field crops, such as hay, corn, and barley enjoyed their highest sales in years. Sweet cherries and blueberries have increased their production value tremendously the past couple of years."

Besides labor, other expenses, including higher feed prices for livestock producers, dragged on their bottom lines.

While Oregon's operators have seen an average $3,000 increase in their bottom line since 2007, Washington farmers have gained $30,000 on average, Idaho operators have gained $45,000 per farm, and California operators are up $100,000 per farm in the past five years.

"For a variety of reasons, Oregon agriculture lags in its ability to generate more income as the growth takes place," Searle said. "Some of that is related to water access for irrigation, some to the types of crops and size of farms we have. Oregon has a higher percentage of small farms that generate less than $10,000 a year."