The Minister for Agriculture has indicated she wants State agencies to be flexible with dairy companies when implementing the €300 million dairy investment package.
"Clearly there are limits to this, particularly in respecting EU state aid guidelines," Mary Coughlan said at the official launch of the package in Portlaoise yesterday.
Ms Coughlan had gathered dairy industry chiefs for a meeting designed to outline the specifics of the package designed to stimulate investment in the sector to ensure its long-term viability.
The State will provide €100 million for capital costs of the purchase of new equipment, site development and technical costs, and the companies will provide the remaining €200 million.
She said that in designing the fund, she had emphasised the importance of flexibility and inclusiveness and the objective nature of the fund.
Grant aid will be paid to approve projects in the Border Midlands and West region at 50 per cent while the grant rate elsewhere will be 40 per cent.
There had been pressure on the department to seek a reduction in the minimum project size to under €5 million but Ms Coughlan has rejected this.
Mike Feeney, director of food with Enterprise Ireland which will administer the fund, said it was committed to working with the dairy processing sector to encourage innovation, R&D and new project development.
Such moves would lead to production of higher-value products for sale on global markets where dairy companies compete.
The grant aid will provide an incentive for dairy businesses to rationalise, possibly merge and to develop plant specialisations. It will be available towards the cost of construction and acquisition of buildings, new machinery and equipment.
There are about 30 dairy processing plants in the Republic.
John Tyrrell, director general of Icos, the Irish Co-operative Organisation Society, the umbrella body for the dairy industry, said the scheme had been a catalyst for the industry to explore the range of options for the most effective use of the fund to meet the challenges of the future.
"There is a recognition of the need for strategic change and investment in the dairy sector, and there has been a very positive response from the processing sector to the Minister's announcement," Mr Tyrrell said.
The dairy processing industry has been coming under increasing pressure in the past two years since the Fischler reforms cut EU marketing supports on dairy products.