Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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Question 41: To ask the Minister for the Environment, Community and Local Government the steps he is taking to address problems with Leader funds being allocated to the food business; and if he will make a statement on the matter. [15484/11]

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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The Rural Development Programme (RDP) 2007-2013 is divided into 4 Axes. Axis 1 deals with competitiveness of the agricultural sector; Axis 2 aims to improve the countryside and environment, and the objectives of Axis 3 are to support the diversification of the rural economy and improve the quality of life in rural areas. Axis 4 or the LEADER Axis provides support for the use of a "bottom up" approach to development which ensures that local people are involved in the decision making thereby facilitating sustainable development in a more inclusive way. In Ireland the LEADER approach is used to implement Axis 3 measures.

A significant number of projects funded under the previous LEADER+ programme (2000-2006) and under the Diversification and Business Creation measures of the current RDP involve support for enterprise initiatives that add value to agri-food products. Basic Agricultural products are listed in Annex 1 to the EC Treaty and are commonly called Annex 1 products. Under the main Rural Development Regulation 1698/2005 support/grant aid for adding value to Annex 1 products is facilitated under Axis 1 of the programme. Ireland was recently notified by the European Commission that support/grant aid for adding value to agri-food products is not eligible under Axis 3 but rather under Axis 1 as detailed in the regulation. As a result of this, grant aid under Axis 3 of the RDP for this type of activity is currently suspended.

A significant part of enterprise activity in rural areas focuses on food and food- related businesses and the continued provision of support for these businesses is critical as we look to ways to generate employment in rural Ireland. My Department is aware of the seriousness of this issue and is working with the Department of Agriculture, Fisheries and Food with a view to seeking a resolution.