The Italian neighborhood here is called "The Hill" because it is one of the highest points on the Mississipi River bluffs. A densely-populated area of narrow winding streets filled with tiny workman's bungalows and corner taverns, it is clustered, appropriately around an old spaghetti factory.

Here, Yogi Berra and Joe Garagiola learned how to play baseball in the community park named after Yogi's uncle, Midge Berra who was a city alderman.

At about the same, 14-year-old Armando Pasetti immigrated from Mantova in Northern Italy to apprentice in his uncle's sausage shop, John Volpi and Co.

Working days while going to school at night, he learned how to cure meat according to the time-honored recipes his ancestors used.

Almost 40 years later Italians are still playing a perpetual game of baseball down at Berra Park. The fans come to see where their stars were born. But to most St. Louisans these days "The Hill" is even more synonymous with good food. Despite urban decay elsewhere, this community has prospered because of family-owned restaurants, bakeries, specialty shops and butchers like Volpi's.

If you are with an inhabitant of the Hill, go with him to his favorite shops, all located within five city blocks. There is ravioli from Mama Toscano's Market and noodles from Ravarino Frescchi. For bread - Amighetti's, which also has those small hard rolls in the shape of a figure eight. The Missouri Baking Co. makes several varieties of cannoli. For fresh meat - Columbo's. Viviano's Grocery has the best prices on olive oil, Parmesan and spices, but unless you speak a little Italian, the service can be very slow. You want salami or ham? Try Volpi's.

Pasetti, who inherited his uncle's business; is one of the few American manufacturers of dry salt-cured prosciutto ham, an ingredient indispensable in the preparation of authentic Italian antipasti, cannelloni, veal scalloppini and some sauces.

The firm produces about a million pounds of ham and sausage a year for ethnic restaurants and specialty shops. Washington's Tiberio and II Guardino, unable to import prosciutto from Italy, use Volpi's hams.

Although most of their trade is wholesale, the neat, white-washed packing house has a retail counter in the front where one can buy fresh, cooked or dried sausage. Prosciutto hams are sold whole or by the slice.

Dried Italian salami comes in two sizes, the filsette salami about 2 1/2 inches in diameter and the Genoa type, about 4 inches wide. Coppa is another dried variety made of whole pork shoulder rolled in a sausage shape, plain or with peppers. Cacciatori sausage has large chunks of pork with garlic seasoning. (KEY OFF) asetti (KEYWORD) calls his mortadella an Italian garlic baloney. Like salami e cotto, it is cooked but not dried. Then there are the fresh sausages seasoned with fennel or garlic; and cotechini, a rare delicacy containing finely minced pork skins.

"Prosciutto is not exactly a Christmas ham," stocky, apron-clad Pasetti said during an interview. "Occasionally customers have purchased it with their intention of baking the whole thing for dinner and I'm afraid they have been sorely disappointed.

"Prosciutto has a piquant flavor used as an accompaniment or seasoning for other foods. It needs no cooking, but must be sliced very thin. Thick pieces are too strong and too tough to eat. If you don't have excellent slicing equipment at home, it's better to buy sliced prosciutto from a butcher, rather than purchase a whole ham.

"On the other hand, every bit of the ham can be used. The sliced meat set off the flavor of melon for antipasto. Leftovers and fatty portions are ground into cannelloni or tortellini filling and the bone makes excellent soup," he said, raising a can of beer in an expansive gesture.

Passeti, 52, employs about 15 people from the community and family members help out when they can. "Actually, we spend more time waiting than anything else," Pasetti said, opening the door to a drying room where hundreds of pungent hams are suspended from the ceiling, the last part of a process that takes six months.

Only perfect hams will do for prosciutto, because an imperfection can taint the flavor. Each one is trimmed, then the heel bone is removed. It's fatty surface is rubbed - by hand - with a mixture of coarse salt, sugar, sodium nitrite and spices including pepper, nutmeg and cloves. Stacked one on top of one another in the curing room, a brine is formed as the salt draws moisture from deep within the hams. Slowly the flavor permeates the meat. During 40 days, each piece is scraped clean and rubbed with curing mixture two or three times.

After a final washington the hams are hung to dry for three or four months in a dehumidified room at a constant temperature below 40 degrees. Although the meat is not cooked, moisture loss diminishes a ham's original weight by at least 35 per cent.

"I prefer to use corn-fed pigs for prosciutto," Pasetti explained, effortlessly hooking one of the 14 to 16 pounds shanks from the ceiling and taking it off the rack for a state test. "But I suppose under the Carter Administration they'll all be peanut-fed."

Dried sausages or whole hams are available by writing to the company at 5256 Daggett, St. Louis, Mo. 63110. Prices fluctuate according to the current meat market, however, recently whole hams have cost about $2.95 a pound plus freight.

Some recipes utilizing prosciutto follow. VEAL SCALLOPPINI (6 servings) 1 1/4 pounds veal scalloppini Salt Flour 3 tablespoons butter 3 tablespoons olive oil 6 slices prosciutto 6 slices (6 ounces) Gruyere cheese or Mozzarella, thinly sliced Fresh or dried sage leaves 1/2 cup white wine 1 (10 1/2-ounce) package peas, still frozen

Pound scalloppini, sprinkle with salt and coat with flour. Saute in butter and oil for about 3 minutes on each side, or until lightly browned. (Don't crowd pan. Cook only a few at a time.)

Cover each slice with a slice of ham, a slice of cheese and sage leaf, securing them with a toothpick.

Return meat to pan or a baking dish in a single layer. Add wine, enough water or chicken bouillon to barely cover the meat and sprinkle peas on top. Cover and cook over very low heat for about 15 minutes then season to taste with salt. Remove toothpicks, serve scalloppini with pan juices and peas. Pasta is a good accompaniment. PROSCIUTTO ANTIPASTI

With melon - Slice very ripe honeydew or cantaloupe into wedges, seed. Lay a strip or several strips of prosciutto across each. Alternately wrap melon cubes in ham, secure with toothpick.

With crab - Wrap 1 tablespoon lump crabmeat in each slice of ham.Secure with a toothpick. Saute briefly in a sauce of 3/4 cup butter, 1 teaspoon Worcestershire sauce, dash hot pepper sauce and the juice of 1 lemon. MELANIE FATHMAN'S CANNELLONI (12 to 15 servings) 3 chicken breasts, boned 12 tablespoons butter 7 chicken livers 10 slices prosciutto 2 cups grated Parmesan cheese 1/2 cup all-purpose flour 1 quart milk, scalded 1 cup heavy cream 1/4 teaspoon white pepper Salt to taste 36 crepes

Saute chicken breasts in 4 tablespoons butter until meat is opaque. Saute chicken livers in the same skillet. Grind the chicken, livers and prosciutto using the finest blade of the food mill or a food processor. Add 1 cup of grated cheese and mix.

Melt remaining butter (1 stick), in a heavy-bottomed saucepan. Add flour and stir with a wire whisk until blended. Add the scalded milk to the roux, stirring vigorously with the whisk. Cook, stirring, until thickened. Add cream, season with white pepper and salt to taste.

Beat about 1 cup of the sauce into the ground meat mixture. Blend lightly but thoroughly.

Spread about 2 tablespoons of filling on each crepes and roll tightly.Arrange the rolls of filled crepes in two layers in a large casserole or individual ramekins. Sprinkle each layer with some of the remaining Parmesan and cover with some of the reserved sauce.

This preparation may be done ahead. Dot each dish with a little additional butter and bake in a preheated 375-degree over for 20 minutes or until the top is lightly browned.