H.—3oa.

The alteration in the method of assessing grades for butter sold on the local market, which was dealt with in the last annual report, has not so far been proceeded with. It was felt that the difficulties which would arise if one box of butter from each churning for local were to be sent to grade stores for grading were such that the Department should give further consideration to this matter. The fact that some butter-manufacturing companies require, during part of the year, all the butter made at that time for local supply, plus in many cases further quantities from cool stores, would mean that butter sent to grade stores would immediately be returned, causing freights to and from cool store and allowing deterioration in the butter itself. Conversations are now taking place with the Director of the Dairy Division of the Department of Agriculture in order to endeavour to work out some procedure which, while generally giving the required information, will at the same time obviate unnecessary extra work or inconvenience to the factories. It is readily admitted that during that period of the season when a butter-factory is forwarding quantities for export the packing of one box in conformity with export standards from each churning of local butter will cause little or no inconvenience, and if as an outcome of the discussions mentioned above some system can be evolved whereby the winter production can be graded without extra work, it would bo duly appreciated by the factory-managers, as it will relieve them of considerable responsibility. Unfortunately, it is in the period of low production, when the whole of the produce is sold locally, that it is most necessary to have local butter graded, because when there are no export quantities to standardize by the factory-manager is more apt to overstate or understate the grade points. If, therefore, a procedure can be designed which will at least give the managers a standard at regular periods, it will be of assistance to both the managers and the Division. During the season under review some small matters have received attention or have been altered to meet conditions which have arisen, but in general the period has been more taken up with systematizing the provisions of the regulations. In any departure from existing procedures, it is advisable to make changes as slowly as possible in order that those working under the conditions may change over normally from the old to the new, and it is desirable to retain those features of the butter distribution in use which arc desirable and economic, and to eliminate only those which ar<; upsetting the orderly marketing of butter or other goods. The more gradual the change-over the easier it is for the Division to assess the value of each proposal as it proceeds. Besides the advisability for gradual alteration in the interests of the industry, the co-ordination of existing practice and distribution must bo proceeded with. The Division has also been busily engaged in evolving the most easily workable and least cumbersome method of compiling returns which will at the same time cause as little extra work as is possible to the dairy-factory executives and yet give the Division a full and complete record of all transactions. The provision of butter for supplying the deficiency which occurs in winter production is a case in point, as it requires careful planning based on accurate statistical information. While it is fairly simple to demand estimates of winter requirements from factory officers and to hold quantities of butter in cool storage to cover these deficiencies, it is often not economic to apply the same procedure to factories in different localities. All kinds of considerations present themselves and have to be taken into account, such as facilities and storage costs for autumn production as compared with freight costs from other areas where there may be a surplus of butter available, as well as the possibility of any breakdown in transport owing to winter conditions, as in the case of Westland and other areas similarly situated. These matters are carefully analysed by the officers of the Division, and decisions as to the particular procedure have to be governed by the circumstances obtaining in each case. In some cases it is cheaper to store surplus summer make for winter requirements, while in others butter purchased from surplus make in outside areas and either shipped or railed to the locality as required may be more economic. It is the endeavour of the Division to maintain butter consumption at the highest level, and in order to accomplish this, and at the same time to encourage factories to place their butter on the market in the best possible Condition, the Division has the butter intended to be held for winter sale by other than the factory of origin graded by the officers of the Dairy Division of the Department of Agriculture no such butter is stored unless it will grade in accordance with the usual grades of the factory for which such butter is intended. The supply of butter for winter requirements is therefore of assistance to the factory, but it makes considerably more work for the officers of the Division on account of the complications involved. Climatic conditions also have repercussions on the quantities available. For instance, the area south of Taihape and Wanganui, from which butter is drawn for the Wellington City market, experienced in the autumn of the year under review a disastrous drought condition which so affected production that, although the usual quantity of stored butter had been provided, it proved insufficient to supply the winter requirements of the city. Ordinarily, it would have been possible to store a further quantity in the late autumn, but this proved to be impossible on account of the sudden and serious drop in the total make, and it was finally found necessary to draw several thousand boxes from Auckland to make up the deficiency in Wellington. In addition, supplies which had been arranged to be sent to the South Island from Wellington had to be drawn from other districts. The Division keeps in close touch with the Export Division, and has at all titn esparticulars of stocks of export butter available for withdrawal so that any shortage in one area may be made up from other sources, and the factories and distributors have at no time had reason for anxiety with regard to the availability of suitable supplies for their local sales. In the South Island large quantities of butter are transferred from one factory to another, the Westland factories' butter being placed

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