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Department,. The scheme, which came into force in June, 1935, closed, so far as applications are concerned, at the end of May, 1936 ( and all outstanding claims are now practically cleared up. It fell to the lot of the Division's officers to approve and pass all work carried out under the scheme. This necessitated at least two inspections in every case, and obviously the work and travelling involved was considerable. Records indicate that applications received from dairy companies totalled 367 and from dairy-farmers 5,356. The capital value of the work involved was, roughly, £600,000, while it is estimated that over £47,000 will finally have been paid out by way of subsidy. The improvements in farm and factory conditions resulting from the financial assistance granted is likely to be an important factor in improved quality of butter and cheese. Certificate-of-record Testing. A review of the certificate-of-record system for the calendar year 1936 shows a slight decrease in the number of certificates issued as compared with 1935. The total first-class certificates issued for the year was 534, and the 1935 figure 554. There was a marked falling off in the number of cows tested in the 305-day-test division, while more support was given to the yearly test than was evident last year. Four hundred and ninety cows received first-class certificates in the yearly division and forty-four in the 305-day division, as against 450 and 104 respectively for the year 1935. Second-class certificates were issued for thirty cows during the period under review, as compared with twenty-nine for 1935. Forty-seven third-class certificates were issued for cows qualifying in this division, as against, 140 for 1935. This substantial decrease may be explained by the fact that this class which has been in operation for four seasons only was made retrospective, and all such certificates have been issued proir to 1936. It may be mentioned that the issue of third-class certificates has been discontinued from Ist January, 1937, and all cows failing to qualify for first-class certificate on subsequent calving requirements only are now being grouped in the second-class. This rearrangement was carried out upon representations from the New Zealand Dairy Breeds Federation. All third-class certificates previously issued are being replaced by certificates in the second class. The average butterfat production for the 490 first-class yearly certificates issued in 1936 was 5091b. This represented a decrease of 7-3 lb. over the 1935 average of 516-3 lb. fat per cow. An increase, however, was shown in average butterfat-production for the forty-four cows tested in the 305-day division, the 1936 figure 437-94 lb. being better by 20-18 lb. fat than the average of 417-76 lb. fat for 1935. Government Official Herd-testing. The summary for the ninth year's operations, which is complete to 30th September, 1936, includes production figures for 1,910 cows, a decrease from the 1934-35 total of 2,058. The cows tested during the season under review were in the herds of 183 breeders, as compared with 195 herds for the preceding season. The 'average yeild for 1,753 cows milked 180 days or more was 326-32 lb. fat from 6,726-9 lb. milk. Ordinary Herd-testing. A total of 245,355 cows received two or more period tests under the above system during the season 1935-36, compared with 265,944 for 1934-35. The average production per cow under the classification of all cows in milk 100 days or more was 257-64 lb. fat, 237,014 cows being represented. A large measure of support received by the group system is evidenced by the following figures. Of the total cows tested 232,538 were tested by the group method, 12,079 under the association system, and 738 by the Dairy Company method. The testing of ordinary dairy herds is now undei the control of the Herd-recording Department of the New Zealand Dairy Board, who will, commencing with the current season, take over the compilation of the annual herd testing statistical review. Staff. Mr. W. Grant, Dairy-produce Grader, who had been with the staff since 1-904, retired on superannuation on the 16th October, 1936. On the 3rd August, 1936, after the lapse of nine years, Mr. J. O'Dea rejoined the Division's Staff, and from the date mentioned was appointed Grader in Charge at Wellington and Supervising Grader for the North Island. Mr. J. G. Ward, previously a Farm Dairy Instructor, was appointed a Special Inspector. The following officers were also appointed Special Inspectors : Messrs G. E. Mortimer, W. T. W. Bennitt, A. Carnie, E. M. Grant, and L. A. Webster. The following Farm Dairy Instructors were appointed during the year: Messrs 11. Old, L. C: Cooke, C. E. Foskett, and J. A. Maloney. Mr. T. W. Hair was appointed to the staff of C.O.R. Testing Officers. Thanks. I desire to record my appreciation of the loyal assistance of the staff during another busy year. Thanks are also due to a number of organizations for courteous and helpful co-operation

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