Dara Calleary (Mayo, Fianna Fail)
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Question 111: To ask the Minister for the Environment, Community and Local Government if his attention has been drawn to the restrictions placed on Leader funding companies involved in food preparation, production or processing; if his further attention has been drawn to the damage that this is causing to small companies seeking funding in this area; and if he will make a statement on the matter. [26487/11]

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 the competitiveness of the agricultural sector and Axis 2 aims to improve the countryside and environment. 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 provides support for the use of a "bottom-up" approach to development which ensures local people are involved in 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, support for adding value to Annex 1 products is facilitated under Axis 1 of the programme. Early this year, Ireland was notified by the European Commission that support for adding value to agri-food products is only allowable under Axis 1 and not under Axis 3 of the RDP. As a result, grant aid under Axis 3 of the RDP for this type of activity remains suspended.

Food and food-related business are a significant driver of enterprise activity and I am very aware of the difficulties the restrictions described are having on food related business in rural areas. These businesses require continued support as we look to ways to generate employment in rural Ireland. My Department continues to work with the Department of Agriculture, Fisheries and Food in pursuing a solution that meets the regulatory requirements. We are also maintaining ongoing contacts with the European Commission on the matter. While it is my objective to find an appropriate solution in the context of our overall budgetary situation, it is important to recognise that €62 million is available this year for the LEADER elements of the RDP.