The posts on this blog may sometimes seem discursive- whimsical even. But this one focuses on a matter of extreme urgency for LEADER companies such as Kilkenny LEADER Partnership (KLP). The shocking discovery (there’s no better phrase) that we were not supposed to be funding food projects became news to us in January this year. Initially, it seemed that this new-found bar was only on ‘on-farm food’ projects, which would be extremely serious but at least confinable. But the truth came “dropping slow” in the last couple of weeks, that it was all food projects. Now that’s not a serious issue; it’s a disastrous one!
Disastrous to Who?
Disastrous- not just for LEADER companies, or the LEADER programme, or the existing and potential food enterprises of Ireland- but especially for the Rural Development Programme (RDP). The crux of the matter is that due to a misunderstanding at state level on which of the three main funding ‘axes’ of the RDP should be supporting small food businesses and the lack of flexibility in the budgets to remedy the error. We should make clear at this stage what is at stake here. Small food businesses offer the most obvious source of opportunity to employment and economic sustainability for rural communities – that across all of the EU, but Ireland is particularly well positioned here. The set up costs of a food business are significant and LEADER’s grant aid profile and range of supports has been a lifeline at a time when other pools of support had become scarcer. The Department of Agriculture, Fisheries & Food recently launched ‘Food Harvest 2020’ highlights the huge potential of the sector in addressing the country’s employment and enterprise needs. So Ireland stand to lose big-time, if this is not resolved.
What it Means
LEADER companies have a long standing and proud record of supporting these businesses. KLP has prioritised the development of the food sector in its plan until 2013. Having just brokered and published an integrated Food Strategy last year, we are in the process of appointing an Implementation Team to drive it when the boom came down. Like most other LEADER companies in Ireland we have made food a priority for this programme. Ironically the very fact that the situation is so serious for the state, that the soon-to-be dissolved Department of Community, Equality an Gaeltacht Affairs (CEGA) has moved to first clarify the issues and then to resolve them. No more than the LEADER companies, CEGA’s current officials were shocked by the appalling vista that faced us all. CEGA’s preliminary estimates reckon that approximately 40% of the enterprise projects approved under the programme are food related. LEADER companies such as KLP would reinforce that- and add that the downstream employment potential from food projects is exponential in scale. KLP, food enterprises such as Goatsbridge Trout Farm and Oldtown Bakery have not only realised their job targets- but by-passed them. No other sector offers the same opportunities for employment.
How Could it Happen?
So how did the RDP get itself into this situation? Well it comes down to the allocation of responsibilities to the funding axes and the levels of funding in them. The RDP in Ireland has a total budget of €5,778 million. Because of the way this particular programme is drafted food projects can only be funded through axis 1. In fairness this only became apparent to anyone once the EU’s attention was drawn to it. No one is sure who worked this our and informed the Commission. But anyway, axis 1 is focused on training supports, installation funds for young farmers and early retirement programmes. It has no spare funding. On the other hand, axis 3 (LEADER project funds), has plenty of funding which now cannot be used for food projects. Axis 4 is the much smaller administration and animation fund that runs LEADER. The obvious solution might seem to be to take money from axis 3 and reallocate it to axis 1. But this cannot be done, because axis 3 has been set at the minimum 10% level for any of the 3 axes in the programme!
The Allocation of Funding in the RDP Axes
How Can it be Resolved?
This is not just an Irish problem and several other EU states have been happily funding food projects from axis 3 since this current programme began in 2007. They too will need to remedy their error. The difference is that other countries may have some flexibility in their overall RDP budgets that will allow them to absorb and reallocate funding without a reallignment of their programme budget. In Ireland we do not have such flexibility. So if we want to fund food projects in Ireland, either money is found in axis 1, which apparently is not possible – or in axis 2. Axis 2 is by far the largest one with 80% of the funding available. Its funding is focused on environment, biodiversity, REPs, NATURA 2000 and some related programmes. The Department of CEGA is now in discussions with its sister Department of DAFF to get a solution. It is accepted that this will require an amendment to the programme and its axes allocations. We commend the current officials in CEGA for recognising the critical need to act on this issue.
What Happens if We Don’t Fix It?
Taking money from any axis is replete with financial, logistical and – of course political implications. Change won’t be easy. There are no winners in this; but if it’s no sorted, we’ll all be big losers. The ball is in the court of Irish politicians and the senior civil service to win those arguments and then make the case to the EU Commission. KLP awaits with intense interest what transpires. The frustration involved is compounded by the awareness that we have no back door here! We’ve attached so much credibility on supporting food that if we can’t deliver on our promises- well…….? But the issue is much bigger than KLP’s credibility. If the Irish state wants to use the food sector as a springboard to sustainable economic growth, it must not only amend this obvious and accepted error but make any amendments in its power to ensure that the programme can function effectively in the food sector. It’s not like there are many alternatives!
