The process of concentration, equalisation and dispersion is a peculiar characteristic of agricultural marketing. To get products from growers into the hands of distant consumers involves three important and related proc esses which may be called concentration, equalisation and dispersion.
(a) Concentration: Concentration begins with the collection of small surpluses of individual farms at the country’s trading centres which may be the primary markets, secondary markets or tertiary markets. The basic raw materials, foodstuffs etc. are at first concentrated at the central points.
Concentration is particularly important in the marketing of goods sold in their natural state. Raw cotton, wool grain (to be milled) iron ore, fresh fruits, vegetables, liquid milk etc. are concentrated. Concentration is also important in the marketing of some manufactured products that are used as production goods by other manufacturers.
(b) Equalization: The activity which we frequently call equalization. It occurs between the processes of concentration and dispersion. The supplies that flow into the primary and secondary markets more or less fluctuate in quantity due either to the seasonal character of the crops or changes in weather, or prices. Similarly, the demand is constantly changing. By adjusting the fluctuating supply to a constantly changing demand, these markets perform an indispensable equalising process.
Equalisation thus consists of adjustments of supply to demand on the basis of time, quantity and quality. It is the process by means of which the supply of goods ready for sale is adjusted to the demand for them.
The production and consumption of most agricultural products are often seasonal and demand is subject to frequent fluctuations. As a result, the flow of products to the market does not correspond in point of time to the demands for consumption. Besides, the amount and quality of goods as they come from the growers do not meet the needs of the users. So, supplies must be adjusted to meet the demands for specific amount and quality.
(c) Dispersion: The final step in adjusting the farm supply to the demands of manufacturers and consumers is the process of dispersion. This is the process of dispensing toward the consumer those commodities which have been concentrated in the central markets and equalised in the wholesale markets.
Agricultural raw materials are dispersed to manufacturers and products ready for final consumption are dispersed to middlemen for further dispersion to final consumers. Figure A demonstrates the processes of concentration and dispersion.
Concentration, equalisation and dispersion are the heart of marketing. The transfer of title between producer and consumer is greatly facilitated by the processes of concentration and dispersion. Equalisation takes place in the wholesale markets which may be looked upon as great reservoirs into which goods flow in varying quantities and in many varieties and qualities.
The goods are held in the wholesale markets until the demand for them brings about their dispersion toward the consuming markets or the retail markets. It is to be noted that the methods of concentration and dispersion of agricultural products are not the same for all products. There are some products which are dispersed to the consumer after having been shipped to the central markets directly by the producers. They may be dispersed with or without any processing. Some products are first collected at local markets and are then sent to the central markets.
Dispersion is more important than concentration in the marketing of most manufactured goods. The great majority of products are first concentrated as raw materials, processed and then dipersed as manufactured products.