How can I convert data in the form of lat, lon, value into a raster file using R?

Several steps required:

1. You say it's a regular 1km grid, but that means the lat-long aren't regular. First you need to transform it to a regular grid coordinate system so the X and Y values are regularly spaced.

   a. Read it into R as a data frame, with columns x, y, yield.

   pts = read.table("file.csv",......)
   

   b. Convert the data frame to a SpatialPointsDataFrame using the sp package and something like:

   library(sp)
   library(rgdal)
   coordinates(pts)=~x+y
   

   c. Convert to your regular km system by first telling it what CRS it is, and then spTransform to the destination.

   proj4string(pts)=CRS("+init=epsg:4326") # set it to lat-long
   pts = spTransform(pts,CRS("insert your proj4 string here"))
   

   d. Tell R that this is gridded:

   gridded(pts) = TRUE
   

   At this point you'll get an error if your coordinates don't lie on a nice regular grid.

2. Now use the raster package to convert to a raster and set its CRS:

   r = raster(pts)
   projection(r) = CRS("insert your proj4 string here")
   

3. Now have a look:

   plot(r)
   

4. Now write it as a geoTIFF file using the raster package:

   writeRaster(r,"pts.tif")
   

This geoTIFF should be readable in all major GIS packages. The obvious missing piece here is the proj4 string to convert to: this will probably be some kind of UTM reference system. Hard to tell without some more data...

Since the question was last answered, a much easier solution exists by using the raster package's rasterFromXYZ function that encapsulates all of the steps necessary (including specification of the CRS string).

library(raster)
rasterFromXYZ(mydata)