01/02/2012 (Reuters) - Biodiesel output in Italy, a major producer in the European Union, dropped 29 percent to 520,000 tonnes in 2011 hit by surging inflows of cheaper imports, preliminary data from biofuels industry body Assocostieri showed on Tuesday.

Imports of biodiesel into Italy jumped 25 percent to 800,000 tonnes last year while exports rose 20 percent to 130,000 tonnes, according to the Assocostieri data obtained by Reuters.

Italian biodiesel industry, which uses mostly imported raw materials including palm oil and rapeseed, has been hit hard in the past couple of years by heavily subsidised imports from the Americas and Asia which can cost less than the raw materials.

Italy produced 731,844 tonnes of biodiesel in 2010 when it imported 639,684 tonnes of the fuel to meet a demand of about 1.3 million tonnes, and exported 107,956 tonnes, according to data on the Assocostieri website. (www.assocostieri.it).

Italy's obligatory share of biofuels in car fuel, part of the European Union's fight against climate change, is set at 4.5 percent for 2012 and is due to rise to 5.0 percent by 2014. Biodiesel accounts for most biofuels use in Italy.