Vietnam has achieved significant progress in improving people's living standards, but not in rural areas, a study by the Central Institute for Economic Management has found.

Farmers produce chopsticks for Thanh Tai enterprise in HCM City, which received capital from the city's fund for poverty reduction. Although some enterprises received the funds and improved their earnings, rural households' income and spending still declined.

The survey, which polled 3,700 households in 12 provinces last year, in fact found rural incomes and spending declining.

The poverty rate did not fall in 2010-12, because a number of households slipped back below the poverty level while many others escaped poverty for the first time during the period.

The average income of farming households was only VND1.46 million (US$70) per month per person.

Half of the surveyed households said they borrowed, mostly from the black market at high interest rates. Only 13 per cent borrowed from banks and other credit organisations.

Asked about happiness, 7.5 per cent said they were very happy, 45.1 per cent said they were rather happy, 41.5 per cent said they were not very happy and 5.8 per cent said they were not happy at all.

Understandably because of the slow rural growth, there was a big gap in economic and social development between provinces and cities.

People living in mountainous areas, especially in the north-west, were poorer and had little access to essentials like clean water and quality housing.

Northern mountainous provinces like Lao Cai, Dien Bien, and Lai Chau also lagged behind others in terms of income, services, and markets.

Farmers are forced to sell their products mostly through two channels — households and traders.

Luu Duc Khai, head of CIEM's Rural Development Policy Division, said many changes like restructuring the agricultural sector are needed to improve the standard of living in rural areas.

CIEM economists said the Government should study measures to increase the capacity of farmers to cope with risks, with focus on agriculture insurance and developing the market for land in rural areas.

If farmers could sell and buy land easily, land would be used effectively, they explained.

They also said the Government should continue to give priority to developing mountainous areas by investing in human resources and infrastructure to improve the value of agricultural products.