VIETNAM'S SOCIO-ECONOMIC DEVELOPMENT No.9

CRITERIA FOR RURAL POVERTY MONITORING

VU TUAN ANH
* Dr. Vu Tuan Anh is a research fellow at the Institute of Economics, Hanoi.

In the mid-1980s some institutions and researchers began to study poverty in Vietnam. Some investigations of the real state of the agricultural economy, the peasants' life and the population's living standard were conducted. Notable ones include: In 1990 the Central Department of Agriculture and the Ministry of Agriculture investigated agriculture and the countryside in 5 provinces (about 5000 household samples). In 1991 the Ministry of Agriculture investigated 3057 poor and rich households in 7 provinces, and in 1992 an additional 3046 households in 9 provinces. In 1992-1993 the General Statistics Office and the State Planning Committee conducted the first investigation into the population's living standard (UN Development Programme, SIDA support; 4800 households nationwide). In 1993 the GSO investigated the rich and poor with 93,732 sampled households. In 1994 the GSO conducted the multi-targeted household investigation (45,000 samples). In 1995-1996 the GSO conducted the overall investigation of agriculture and countryside covering over 11 million rural households—the biggest so far.

The above investigations differ in purpose and method; comparison of results across time is difficult. Most prominent among studies on poverty assessment in Vietnam are those of the Ministry of Labour, War Invalid and Social Affairs (MOLISA). They have presented notions and policies of various countries and brought forward a system of norms to measure poverty based on household income. This method is commonly applied within the national programme of hunger eradication and poverty reduction.

In Vietnamese documents, poverty is defined as "the situation where a part of the population cannot satisfy the bare necessities of life". The essence is the satisfaction of fundamental needs; qualitative and quantitative measures depend on concrete conditions of each locality. This refers to the concept of absolute poverty. The concept of relative poverty is sometimes raised but has no practical significance in policy-making since absolute poverty is the first objective. Besides poverty, the concept of hunger is used to designate a degree of utterly poor—households having no rice for several months, must borrow and cannot repay. The concept of poor area is also used: localities with much higher ratio of poor households and much lower living standard, with unfavourable natural conditions and less developed infrastructure.

Qualitative standards for poverty assessment are easily agreed upon, but there are many ways to show them by quantitative standards, resulting in different ratios of the poor. The poverty line is the most important standard. The poverty line used in the government's hunger eradication and poverty reduction policy is income per capita. It is favourable for investigation because it has money as the uniform unit. For rural households, income is defined as the difference between total from economic activities and production cost (excluding labour cost). The standard of average quantity of rice per person per month is significant for the poor because the first urgent need is sufficient rice.

The poverty line has been calculated differently by different institutions, although the difference is not so big. The MOLISA 1993 poverty line was based on average income per capita per month bartered for rice. The investigation results are presented in Table 1.

The basis for 15 kg of rice as the standard for absolute poverty: (1) The average income per capita per month in the countryside in 1992 was about 60 thousand dong, equivalent to 30 kg of rice; so the poverty line is 30 thousand dong (15 kg of rice). (2) Peasant household expenditure structure is 70% for food, 30% for other needs. With income equivalent to 15 kg of rice, food expenditure is 10.5 kg—calories sufficiently supplied. (3) Many localities have taken 15 kg of rice or 30,000 dong per capita per month as the level to assess poverty and hunger. The poverty line for plain and cities is estimated higher. Table 2 shows the 1996 poverty line.

* Value standard estimated at rice price VND 4000/kg, early 1996.

According to the above poverty line, at the end of 1995 there were 2,945,897 poor and hungry households (20.3% of total), with 14,788,374 people. Of these, 598,746 hungry households (4.1%) with 3,005,704 people; 2,346,133 poor households (16.2%) with 11,782,670 people. Table 3 shows the distribution by area.

Source: MOLISA - Report on hunger eradication and poverty reduction 1992-1995, Hanoi 1996.

The General Statistics Office (GSO) also conducts poverty assessment. In 1992-1993 it conducted national-scale investigations. The GSO accepted a poverty standard of 2100 calories per capita per day. The World Bank experts determined 60% of total expenditures for food, 40% for other needs. The GSO assumed 2100 calories equivalent to VND 70,000/month in cities and VND 50,000/month in the countryside (1993 prices). Table 4 shows expenditure per capita from the living standard survey.

Source: Vietnam Poverty Assessment and Strategy, World Bank Report No.13442-VN.

Remarks on the poverty line definition: First, it is sound to consider the food standard as chief, but it is used with different extents (MOLISA: 13 kg rice≈1500 cal; GSO: 2100 cal≈VND 840,000 cities, VND 600,000 countryside). The reason for 2100 cal has not been cleared up—it is the WHO minimum. Table 5 compares food consumption of quintile 3 (VLSS) with the diet recommended by the National Institute of Nutrition.

Source: VLSS p.198; Vu Manh Thien (1996).

We estimate that if the minimum energy for an adult is 2100 calories, the per capita standard will be 1800 calories (children 1450). By this standard, the poverty line would lie in quintile 2 (1850 calories). Second, after the food poverty line is defined, other needs are calculated with different ratios (MOLISA: 30%; household survey: 40%). Third, the value standard of income/expenditure is the main tool; GSO relies on expenditure, Vietnamese institutions on income. Fourth, other standards (nutrition, housing, education, etc.) are mentioned but not reflected in the poverty line. Problems remain: how many calories; defining value of food package; defining minimum proportion of other needs; income or expenditure as main standard.

There are two methods to assess the poverty line: the direct method (measuring real consumption of products/services to meet fundamental needs) and the income method (measuring income or expenditure per capita). Both have merits and defects. Direct standards reflect accurately the degree of meeting fundamental needs but have different units. The income standard has general significance but does not imply all aspects. Both have been used depending on the purpose.

We distinguish two types of survey: national household survey (multi-targeted, sparser frequency, smaller samples, complex indicators) and community-based monitoring survey (narrow target, village-level, simple questionnaire, annually or every 6 months). Table 6 indicates the difference.

The community-based assessment can be at two levels: (a) entire community (village/hamlet)—public goods like water, electricity, infirmaries, schools; (b) household—individual consumer goods and services. The system of indicators for household poverty monitoring we propose uses the direct method. It is not advisable to use synthetical standards (total income) in community-based monitoring. We propose 12 indicators reflecting minimum norms on the most fundamental needs: food, clothing, dwelling, jobs, health, education (Table 7).

By giving marks on these 12 indicators, we classify poor households: poor (3 indicators under norm), very poor (5+ indicators under norm). Indicator 1 (minimum rice 12 kg/man/month) is based on rice as the principal food. Indicator 2 reflects meal quality. Indicators 3-4 cover clothing (clothes/blankets, mosquito nets). Indicator 5 reflects employment. Indicators 6-8 cover health (child malnutrition, adult chronic disease, inability to afford medical care). Indicators 9-11 cover education (illiteracy, non-enrollment, no radio/TV). Indicator 12 covers housing (tents/huts).

The system of indicators at the community level reflects the extent of satisfying fundamental needs for public goods (Table 8).

Community-level indicators are gathered by village statistics cadres from administrative institutions, informants, schools, and mass organizations. Household poverty is monitored every six months. Most indicators can be gathered by interviews and rapid observation; only malnutrition requires measurement. The participatory principle should be widely applied. After gathering data, the village cadre synthesizes it at community and household levels. The restoration of the village statistics cadre's function is most important for the feasibility of this poverty monitoring process.

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