H.—ls.

2

The Tophouse and Nelson country has stood the test of shearing and straggling muster without any scabby sheep being seen. The waste lands on Tophouse Block have been scoured again this year and found clean. D'Urville and Arapawa Islands have again been mustered, but no scab was found, although a few stragglers were killed on each place. In the Kaikoura Subdivision great energy has been used in the destruction of wild sheep, with the result that about 4,000 have been killed up to the end of March, or a total of 8,500 since the work was first initiated in 1885. In these a considerable percentage of scab existed, and even since the Ist January last three scabby wild sheep ha,ve been killed. The expenditure as shown has been very considerable, and must be continued up till the end of this month. Subsequent to that date, and until after next shearing, one gang of men will be retained to rescour the whole block, by which time it is hoped that the utter extermination of wild sheep will have been effected, and this menace to adjoining flocks removed. From the extraordinary number of wild sheep and stragglers that were killed it can easily be understood what little chance existed of cleaning the neighbouring flocks had not this work been undertaken and carried out, and it must be continued until this area is thoroughly safe. Three thousand two hundred and sixty wild sheep were killed during the season, for which the sum of £3,627 Us. Bd. was paid in wages and scalp-money at Is. per head on number killed. No flocks have been destroyed during the past twelve months, nor has any expenditure been incurred for compensation. I may mention that, since last year's report was furnished, the Clarence Bun, there alluded to as having been seized by the department, has been cleaned and returned to the owners, and all expenses incurred in cleaning it have been refunded. The adjoining run of Waipapa, on which all sheep were destroyed in 1885-86, has been restocked during this year. The sheep are within fences, and, as they adjoin the lands that have been one of the principal fastnesses for wild sheep and stragglers, I look upon the restocking of this run as a test case which will prove that the country is safe for the future, or the reverse. Every precaution having been taken, the fences put into thorough repair, the country well scoured prior to restocking, and the present owners are working cordially with the department to prevent, if possible, any further chance of reinfection. With a view of promptly dealing with scab in the future should occasion require it, an amendment to the present Act is proposed, by which all infected sheep can be destroyed on compensation at half their value; and it further provides that all infected Crown land runs can, where necessary, have the licenses cancelled without compensation. The word " negligently " in section 45 is also omitted from-the proposed amendment to the Act; this renders it imperative that owners should keep infected sheep from straying. It is further proposed, as soon as the colony is clean, to amend the sections referring to shipped sheep within the colony from clean district to clean district, or within districts. The country should now be sufficiently free from disease to render a great deal of the present legal inspection unnecessary without running any risk. Other slight alterations are being carried out with a view to meet the altered aspect in the status of the officers who replace those dispensed with consequent upon retrenchment. The ravages of the kea have not been complained of this year as much as in some former seasons. The bonus given, for their destruction by the County Councils, supplemented by the Government, has caused considerable reduction in their numbers, and, if increased sufficiently, would terminate this pest. It is also evident that although the rabbit pest is spreading over a large area, and is- taxing the sheep industry to a ruinous extent, yet, withal, the number of sheep is annually increasing, nor can any great decrease be observed in any one rabbit district. This, I submit, shows that the repressive measures employed are keeping the pest well in check, and a decided increase in the number of sheep is shown on some runs which a few years back could be classed as essentially rabbitty. Generally speaking, .throughout the colony a more than ordinary clip was experienced, with one of the best lambings known for years, and flocks unusually healthy. In Otago an exceptionally good season for autumn feed has prevailed. I may conclude by stating that the colony is this year more free from scab than it has ever been; in fact, no actual scab is known to exist, and I shall be greatly disappointed if lam not able to report before the close of this month that the last infected flock has obtained its clean certificate; and that the Australian ports will bo open to our sheep before long without present restrictions, which amount to prohibition. I have, &c, Benjamin P. Bayly, The Hon. the Colonial Secretary, Wellington. Superintending Inspector.

Postscript.—Since writing the above, the last infected flock (Okukari) has obtained a clean certificate. All flocks within the colony arc now clean, and all hold clean certificates. Benjamin P, Bayly, 16th May, 1887. Superintending Inspector.