Spain farmers' income drops in 2011 vs EU growth

* Income per farm down 0.7 pct in real terms

* Subsidies amount to 6.63 bln euros

MADRID Dec 21 (Reuters) - Spanish farmers' average income fell in 2011, versus an increase for EU farmers overall, as costs of fuel, fertiliser and feed outpaced any gains in prices for crops and livestock, the agriculture ministry said on Wednesday.

The ministry said average income per farm declined by 0.7 percent after correcting for inflation, which compared with a rise of 6.7 percent for the 27-country European Union as a whole.

Growers of fruit and vegetables were hit after Spanish produce was erroneously blamed for a deadly E. coli outbreak in Germany.

Farmers' income from growing crops inched up by 0.1 percent as increased production barely offset falling prices.

Revenue from rearing livestock, meanwhile, gained 10.4 percent as both production and prices rose.

Production costs rose by 12.3 percent, however, leaving farmers worse off. Potential losses were lessened, however, by a 0.7 percent rise in subsidies to 6.632 billion euros ($8.7 billion).

Farmers say the EU needs to make farming more profitable in Spain in its forthcoming overhaul of the 55 billion euro ($75 billion) a year Common Agricultural Policy (CAP) to prevent young people from leaving the land for cities.

One of Spanish farmers' fundamental problems is that they cannot grow nearly as much cereal in the country's parched, infertile soil as counterparts in northern Europe.

Spain is, however, a major exporter of fruit, vegetables, citrus fruits and wine, and the world's biggest producer of olive oil. ($1 = 0.7628 euros) (Reporting By Martin Roberts, editing by Jane Baird)