Farmers will get higher prices next year for their goods - and the results will show at the supermarket checkout lane - but those gains in rural America will be largely offset by lower government subsidies and higher production costs, a key Agriculture Department official said Tuesday.

In remarks prepared for the opening of the Agriculture Department's Agricultural Outlook Conference, James R. Donald said smaller crop supplies, firm demand and higher prices highlight the 1989 outlook. Donald is chairman of the World Agricultural Outlook Board.Consumers are expected to pay 3 percent to 5 percent more for food in 1989, Donald said in remarks prepared for the opening of the three-day conference. The conference is an annual event in which federal officials lay out for farmers and agribusiness their views on prospects for the year ahead.