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the minimum points from 88 to 90 were in many cases carried unanimously, and in ail cases strongly supported at the principal conferences, and special meetings where the proposal was discussed. The change has been given efiect as from the Ist January last. Although the higher minimum has been in operation for only three months financial year, the grading-figures indicate an improvementjin quality which has been pleasing. An exception lias obtained in Taranaki, where dairy companies were led to ignore the opinions of the divisional officers for a time, and a considerable amount of inferior cheese was made. A larger percentage of secondgrade cheese was the result of attempts to get increased yields, and the inferiority so noticeable at the New Zealand grading-ports has been very much in evidence in the United Kingdom, as indicated by reports of the Inspector of Dairy-products in London. The higher percentage of second-grade cheese in Taranaki has caused some who sent forward more inferior cheese than usual to attribute the increased percentage to the increase in the minimum points. It is undoubtedly a fact that had there been no change in the minimum points Taranaki would have had a much larger percentage of secondgrade cheese than usual. There was a marked improvement in cheese-quality during March, and it is hoped that the lesson will not be soon forgotten by those concerned. Cream-shading. The grading of cream and the payment of a differential price for different classes has extended on the voluntary basis during the year. While the extension has been considerable, the general position is unsatisfactory in many districts. There has been a considerable increase of cream-grading in the Wellington Province and Gisborne district. A genuine attempt to inaugurate a general system in Otago, Southland, and Canterbury was made last winter and spring. It is reported that much improvement was experienced during the comparatively short period the scheme was In operation. Unfortunately, the grading was discontinued owing to too much competition for quantity irrespective of quality. The general consensus of opinion amongst the large majority of suppliers and those in control of dairy factories is that the grading should be made compulsory. Voluntary grading would be nearer the ideal, could it be effectively carried out generally. lam of opinion that it will not be so carried out, and that the earlier a compulsory system is approved by the Department the better will it be for all interested in the dairy industry and who have the real interests of the industry at heart. Legislation is, I believe, necessary for providing for a differential payment for second-grade cream, and without this compulsory grading would be useless. Compulsory grading with differential payment would add greatly to the effectiveness of the farm-dairy instruction work. Farm-dairy Instruction. The work of farm-dairy instruction continues to increase in popularity. This pertains more particularly to the North Island, where cream-grading is more general than is the case in the South Island. Further appointments of such officers were made on the new basis approved by the Department early in the year. The change in basis has permitted the Department to extend its assistance over a wider area, and the change was carried out with the transfer of only one officer previously employed on behalf of a group of dairy companies. The present indications point to further requests being received during the ensuing winter for similar appointments in districts not yet undertaking this work. The manner in which officers have carried out this work, and its efficiency, have been favourably commented upon by those in a position to judge. The officers appear to have been successful in winning the confidence of the suppliers, and find much of their time occupied in complying with requests from the dairy-farmers for visits of instruction and help. Inspection of Dairy Produce in United Kingdom. This work has been ably carried out by Mr. Walter Wright so far as time would permit. It is recognized, however, that the volume of imports into the United Kingdom from this Dominion has now attained to such huge quantities, and is going to so many different centres, including the Continent, that there is ample work for more than one officer. Reports have been received on the quality of many dairy companies' butter and cheese, and copies of these have been forwarded to the dairy companies concerned. Special reports on subjects of importance to the Division have also been received from time to time. The value of such work as our officer in, London is doing is of sufficient importance to necessitate its extension. Preservatives in Butter. In September last there appeared the final report of the Departmental Committee on the use of Preservatives and Colouring-matters in Food in the United Kingdom. Evidence given before the committee included the question of preservatives in butter ; and, while portions of the evidence were against the use of preservatives in butter, other evidence was in favour of such use. Representations made by this Department to the High Commissioner have been placed before the British Ministry of Health ; they were to the efiect that it was desirable that the use of preservatives might be left optional. The report of the committee to the Ministry of Health suggests " that a period of two years' grace should be ample to enable such adjustments of methods to be made as would enable all butter to be produced and sold without preservatives." The Ministry of Health has brought forth draft regulations which would prohibit the use of preservatives in butter, but the Ministry will hear objectors