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myself, I hope shortly to be able to make arrangements for the oarryittg-on of grading hero in order that I may move around a bit more and get the new system going. In January, at the request of the Wheat Controller, the graders were called together in Christchurch, where the grading of Government wheat was discussed, and regulations drawn up to deal with any disputes that might arise under section 48 of the Wheat Regulations. On his behalf I also arranged for arbitrators at Nelson, Blenheim Oamaru, Timaru, Feilding, and Palmerston North, to act in ease of dispute. Although it will not be advisable to fix standard grades this (1917-18) season, owing to the fact that so many forward sales have been made, it is suggested that next season the description of grades should be fixed by the Department of Agriculture. Whether they should be permanent grades or grades for the season only is a matter on which the opinions of those interested appear to be equally divided, and this phase of the question may require careful consideration. Another matter which requires investigation is the deterioration in quality of potatoes that very often takes place during transit between South Island and North Island ports. Potatoes have been put on board steamers in good order and condition, and yet when they have been discharged at Auckland have been almost pulp, according to reports received by the shippers, with the result that they have been rejected by the buyer. Potatoes, being what might be termed semi-perishable, ,, are very often apt to .suffer deterioration in transit, partly by sweating in the holds and partly by contact with diseased lines for which the grader will not issue a certificate, but which, being at the ship's side, are sent forward on consignment on growers' account in preference to being sent back to store to be picked over. Another cause of potatoes reaching their destination in bad condition is the rough handling they receive when being stowed in the hold of the ship. Potatoes being heavy and awkward to carry, are usually dropped straight down and stacked where the sling deposits them, and consequently they become bruised and squashed by the weight of the lumpers plus the weight of whatever these men happen to be carrying to the side of the hold. From what is seen of the potatoes that have been shipped during the last season from various ports it is probable that with proper precaution in stowing, and prohibiting of shipment of potatoes that have been rejected by grader, they should reach their destination in as good a condition as that in which they left the shipping-port. With a view to determining if the reasons stated above arc the cause of deterioration in transit it is suggested that trial lots of two or throe tons of potatoes should be shipped to Auckland, and the condition in which they reach their destination noted. In a, report on grading furnished by me last September I strongly advocated making compulsory the grading of all grain and produce shipped to overseas countries, and I would like to see legislation passed to make it so. although until freight becomes more plentiful there will not be much grain, <fee, shipped away. With my next report 1 hope to lie able to give statistics showing to what extent the Government grain graders' services are being utilized, together with a report on the prices ruling for the various classes of produce during the year, and also on the condition in which the grain arrived on the market. New Zealand Hemp Industry. The following report is supplied by Mr. W. 11. Ferris, Chief Hemp Grader, on lita branch, of the division :- The hemp industry during the year ended 31st March, 1918, must be regarded —as far as the output and the highly remunerative prices obtained by the miliars are concerned—as very satisfactory. The output exceeded that of last year by 12,920 bales. The average prices obtained during the year for hemp are as follows : Good-fair £58, high-fair £56, fair £54 per ton. Owing to the impossibility of getting shipping-space for tow, prices for this byproduct dropped considerably, first grade bringing only £10, second grade £8, and third grade, which was hard to dispose of, £5 10s. to £6 per ton. The total value of the hemp, tow, and stripper-slips produced in the Dominion for (lie year was approximately £1,780.620. Quality of H&mp.- There has been a vfry marked increase in the proportion of lower grades of fibre produced, the quality again comparing most unfavourably with that produced during the previous year. The percentage of good-fair produced for the year ended ISlst March, 1916, was 25-:i(> per cent., for 1917 lfi-8-t per cent., and for the year just ended only 7-fi(i per cent. The percentage of high-fair produced is practically the same for the past three years, but fair and common grades have increased by 7 per cent, and 2 per cent, respectively. The only reason thai can be assigned for the small quantity of good-fair milled is the very small difference in prices offering between goodfair, high-fair, and fair. This difference in price is practically made up by the amount of tow left in the fibre through not being properly scutched, and with the present prioes ruling fully 90 per cent, of the millers in the Dominion are quite content to aim at no higher grades than high and low fair , , as a much greater output can be obtained by them and at a less cost of production. The weather conditions during the year were very satisfactory for milling, and Ihe green leaf in fairly good condition, with the exception of three or four flax-swamps in the Manawatu district, which were badly affected by blight and grub pests, with the result that several mills had to close down. Most of the hemp "rejected" at the grading-stores was thus classed owing to inferior milling or damage by flood-water. When such high prices are offering for our hemp as at the present time the percentage of low-grade fibre will usually be high, as it enables persons with very little experience in hemp-milling to make a fair margin of profit by milling even for low, fair, and common grades. Tt may also be stated here that in the Manawatu district, the chief centre of the industry, there are not more than three or four millers who have contracted to supply hemp of a good-fair quality, and several of the largest mills in the same district are turning out no higher grades than high-fair. Quality of Tow. —The quality of this by-product, as can be seen from the attached tables, is gradually improving, all grades showing an improvement on the previous year. However, the quality at the ports of Auckland and Bluff still leaves room for great improvement, the percentage of third grade and condemned at these ports being very high. The percentages of grades at the ports are : — First. Second. Third. (Icmdemncd Auckland .. .. .. .. .. 4-00 8300 50-00 13-00 Wellington .. .. .. .. .. 28-00 54-00 17-25 0-75 Foxton .. .. .. .. .. 27-00 6.1-00 9-00 0-50 Bluff .. .. .. .. .. .. .. 41-00 53-50 5-50 Stripper-slips. —The large decrease in this by-product is accounted for by the low prices offering, and the very high shipping rates. Shipping-space. — Although shipping-facilities were not good, during the past year, flax-merchants were fortunate in getting a fair proportion of the space available, with the result that a considerable amount of hemp was shipped overseas, principally to America and Australia. Shipping-space for tow was out of the question except to Australia, with the result that a considerable quantity of tow is now stored at the various grading-ports, to await improved shipping-facilities. The total amount of hemp stored at the various grading-ports throughout the Dominion at the end of the year was approximately 10,000 tons. Instructional Visits. —A large number of requests were received from millers for instructional visits, and were attended to as soon as convenient, and lam pleased to state in nearly all eases with very good results. That the millers highly appreciated my visits was quite evident from the letters of thanks received from them. Staff. —In August last Mr. W. Petrie, who had been on the grading staff for the last ten years, resigned his position in order to re-enter the hemp-milling business, the vacancy being filled by Mr. J. Fitzgibbon, Although the season was one of the busiest for many years past, 1 am pleased to be able to repprt that all the officers carried, out, their duties in a satisfactory manner.