WASHINGTON, D.C. — While not quite as rosy-looking as three months ago, farm income estimates for 2012 nonetheless are impressive, given the worst drought in a generation, USDA officials said.

In releasing its latest set of income estimates last week, Agriculture Secretary Tom Vilsack put a positive spin on numbers that three months ago were record-setting. Higher-than-anticipated feeds costs and lower values for some livestock and dairy dragged the estimates down below record 2011 numbers.

Net farm income is now pegged to come in at about $114 billion, down about 3.3 percent from 2011’s $117.9 billion. In August, the USDA was projecting net income at $122 billion.

The impact of the drought hit hard in the past three months, Vilsack said.

“(The) forecast is heartening,” he added. “It confirms that American farmers and ranchers remained impressively resilient in 2012, even with tough odds due to one of the worst droughts in more than a generation. While down slightly from the August forecast, today’s estimates for net farm income are the second highest since the 1970s, while total farm household income is expected to rise.

“At the same time, the positive trend of falling debt ratios continues. The forecast suggests that strong farm income should remain a positive factor in carrying farmers and ranchers into the 2013 growing season.”

In August, the USDA projected total farm expenses at $329.1 billion, but three months later revised that to $334 billion.

Feed costs are now estimated to come in at about $64.4 billion, up nearly $10 billion over the 2011 record of $54.6 billion.

“Despite gains in almost all sources of farm income, larger increases in farm expenditures, especially for purchased feed, have more than wiped out those price-led gains to farm income,” Vilsack said.

The USDA, which will close the book on 2012 numbers when it releases its next forecast in February, took note of farmland values and their continued rise.

Nationally, values for farmland and improvements are expected to increase an average of 7.6 percent, according to the forecast.

Land values in some Midwest states continue to set records; on average, farmland values were up 18 percent in Iowa and more than 15 percent in Illinois, said David Oppedahl, an economist with the Federal Reserve Bank in Chicago.

The spike in land values has pushed overall farm equity to a record $2.27 trillion, up more than 7 percent from the previous mark, set last year.