The farmers of the American Agriculture Movement, abandoning their tractorcade tactics but still claiming they are going broke, returned to Washington yesterday for the third consecutive year to lobby for higher prices for farm products.

On Capitol Hill, where two years ago they set loose a herd of goats, farmers quietly stalked congressional office buildings in searched of scarce legislators.

On the Mall, where last year they fought with police and chewed up grass with their giant tractors, the farmers set up stills that make alcohol for use as fuel in cars.

"We have kinda realized more how the system works," said Marvin Meeks, national chairman of AAM and a farmer from Plainview, Texas. "We're gonna work here lobbying like everybody else does."

Commuters in the Washington area need not worry about a repeat of the record-breaking traffic jams that AAM farmers created internationally last February with more than 600 tractors and campers, according to the farmers and local police.

Farmers yesterday brought just one tractor to the Mall and kept it running on pure alcohol that they said was produced in a farm-based still. AAM leaders, who will be allowed to bring a maximum of just 12 tractors into the city and who expect a turnout here of 1,000 farmers this week, said the alochol demonstrations are intended to show that farmers are on the side of consumers weary of high fuel prices.

Yet, despite their new-found docility, the farmers said their problems of low crop prices and skyrocketing production costs have grown more severe in the past year.

"I'm doing terrible," said Earl Frazier, a corn and soybean farmer from Fauquier County, Va. "If prices don't get better for my crops, I'm not going to plant this year."

"The U.S. Department of Agriculture agrees with the AAM farmers that prospects in general for agriculture in the coming year are grim. USDA predictions for 1980 show that for the first time in history gross farm income will grow to a record high while net farm income will drop by nearly one-fifth.

The reason, according to USDA and the farmers here this week, is that the cost of fuel, borrowed money, rent and farm equipment has increased far more rapidly than increases in farm products.

USDA estimates show that while gross farm receipts in 1980 will increase 5 percent over last year, the cost of producing farm goods will jump by more than 13 percent. Agriculture Secretary Bob Bergland, who last year described some of the AAM farmers in Washington as "greedy," told Congress in January that "rising costs of farm inputs is expected to erode much of the gains in higher farm prices."

Farmers in Washington this week are claiming that they are being squeezed out of existence and that soon American consumers are going to regret having allowed the death of the family farm.

"The blood of the nation will be on their (President Carter's, Bergland's and consumers') hands if we ever fail," AAM chairman Meeks told a rally of farmers in Warrenton on Sunday night.

Citing USDA statistics showing that 800 farmers go broke every week and that 60 percent of the nation's food and fiber is now produced by 6 percent of the country's farms. AAM members claim thatg agriculture in the United States is headed toward the same corporate concentration that prevails in the energy industry.

"If I don't get a decent price for my milk. I'm going to have to sell out," said Sam Butler, a Fauquier County supervisor and one of the largest dairy farmers in Virginia. Butler, whose 1,500-acre farm is worth nearly $3.5 million, said there is no way" he can make money when he's selling milk for $1.20 a gallon and buying gasoline for $1.07 a gallon.

AAM leaders, conscious of their anti-consumer image in the past, this year have come to Washington to show that farmers can help reduce the nation's dependence on foreign oil by producing fuel-grade alcohol at competitive prices.

"What we want to show is that it is not the farmers versus consumers, but rather farms (producing alcohol) versus the Arab shieks," said Dick Merritt, a lobbyist for the National Gasohol Commission who spoke to the AAM rally on Sunday night.

Merritt claims it is possible for farmers, given proper government support, to produce enough alcohol to make 10 billion gallons of gasohol (a mixture of 10 percent alcohol and 90 percent gasoline) a year without affecting food prices.

A study last year by the federal Office of Technology disagreed with Merritt, saying that such an increase in gasohol production from agricultural crops, primarily corn, could "drive up the price of farm commodities and ultimately the price of food."

AAM farmers plan to lobby House and Senate conferees who are meeting this week to cnsider the controversial provision of a Senate-passed energy bill that would provide more than $6 billion for gasohol loans, price supports and purchase plans.

Despite their new-found lobbying sophistication and the trappings of a conventional farm organization, such as dues and national director, AAM farmers yesterday looked much as they have in the past two years. They wore AAM hats and many wore overalls.

Many of the farmers, who are veterans of the previous AAM campaigns in Washington, wore buttons commemorating their struggles. A popular button says "I was a POW in Carter's compound," referring to the police barricade that bottled up hundreds of tractors on the Mall for several weeks last year.