H.—44.

The past year has witnessed a decline in hemp-prices to the lowest level reported since pre-war, and considering to-day's costs and conditions, prices are lower than at any other time during the past thirty years. The average prices for " Good fair " for the past four years are as follows : 1927-28, £29 iOs. ; 1928-29, £29; 1929-30, £28 10s. ; 1930-31, £20 10s. The decline in price of raw materials is general throughout the world, and New Zealand Phormium tenax, together with all other fibres, shows a serious fall in price-level. Taking into account the small quantity produced in 1930-31, the price would not be sufficient to cover cost of production and overhead expenses. Grading figures show a considerable decrease in the past four years as shown hereunder : 1927-28, 17,803 tons ; 1928-29, 11,705 tons ; 1929-30, 13,154 tons ; 1930-31, 4,689 tons. The Department has communicated with the New Zealand Trade Commissioners overseas in regard to the stimulating of existing trade and the possibility of developing new markets for New Zealand hemp. The position at present is not bright, and little improvement can be expected under existing world-market conditions for fibres. The Department has for some years past been associated with proposals for the utilization of flax-waste for corn-sacks, woolpacks, &c., and has arranged at various times for the examination and testing of these materials by Departments having the necessary appliances for the purpose. A proposal to manufacture sacks and woolpacks has been revived, and experiments in regard to the suitability of flax in the manufacture of woolpacks was recently successfully demonstrated in Wellington. The questions of obtaining suitable machinery and of the cost of production are matters which are now engaging the attention of the promoters of this new industry. Tobacco Industry. The production of tobacco-leaf in the Dominion is steadily increasing. The area under tobacco in 1925-26 was 450 acres, and in 1929-30 this had increased" to 1,587 acres. The quantity and value of the leaf produced and sold in the Dominion in those years were as follows :—

The number of growers in 1925-26 was 160 —all in the Nelson District—and in 1929-30 the number had increased to 491 in the Nelson District and five companies were operating in the Auckland District. During 1929 quite a boom set in, and several companies were incorporated to grow and manufacture tobacco, chiefly in the Auckland District. Some of these have failed, and others have amalgamated in order to conserve the interests of their shareholders and to exploit to the best advantage the possibilities of the limited market for tobacco at present available in the Dominion. The great body of individual growers have been supplying the two manufacturing companies for some years past, and, as a whole, have obtained very fair financial results. These companies are fully supplied with leaf by these growers, and consequently the large growing companies who have entered the industry during the past two years are experiencing difficulty in finding a market for their product. They may be able to succeed by manufacturing on their own account, but will in that case be faced with the difficulties and expense of selling their product under brands which are as yet unknown and unproved as regards quality. There remains the possibility of establishing export markets in Australia and Great Britain, and the Department has co-operated in the efforts which have been made to sell leaf in these countries. Up to the present these efforts have not met with any appreciable success. The Australian market gives a preference of Is. 6d. per pound on New Zealand leaf, and the British market is also preferential in regard to all tobacco-leaf grown in the Empire. During the year 1930 the export of New-Zealand-grown tobacco-leaf was 1001b. only, probably comprised of samples sent to Australia and Great Britain. Tung-oil Industbt. During the year the possibilities of establishing this important industry in the North Auckland district have received the attention of numerous business men, and five companies were registered and are raising funds, principally by means of bonds and debentures of various values, for the purpose. The sum total of these amounts to £780,000, and should this part of the Dominion prove suitable as regards soil and climate for the growth and fruiting of the tung-oil tree a very valuable industry will be established. As yet tung-oil is not in common use in the Dominion, except in so far as it forms an integral part of many imported manufactured commodities. If it can be produced successfully, overseas markets will have to be exploited, as the areas already in process of being planted with this tree will produce tung-oil much in excess of any local requirements. There can be little doubt that tung-oil will be in good demand for many years, as its use in industry is increasing.

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j I I Year. j Nelson District. j Value. Auckland District, j Value. lb. £ lb. £ 1925-26 .. .. .. 360,000 I 36,000 1929-30 .. .. .. 1,045,632 j 105,828 215,600 21,460