Household Expenditure among Farming Households in North and Northeast Thailand

The farm survey was conducted from April–July 2006 in eight provinces to compare the socioeconomic characteristics of small-scale organic and conventional rice farmers. In Northern Thailand, the survey covered four provinces, namely Chiangmai, Payao, Chiangrai, and Uthaithani. In Northeast Thailand, it covered four provinces, namely Ubon Ratchathani, Amnartcharoen, Surin, and Yasothon. A total of 626 farms were surveyed, including 309 organic farms and 317 conventional farms. All the organic farms were certified organic and had not used chemicals for at least three years. They were producing mainly for export market.

Overall, the survey sample is representative of poor rural households in the rice-based, rainfed ecosystem of Southeast Asia. Table 1 [ PDF 15.9KB | 1 page ] shows the household and farm characteristics of the sampled farms. On average, organic and conventional farmers are very similar in terms of age, education, and income, although organic households owned significantly more land than conventional households.

Total household expenditure (Table 2 [ PDF 15.9KB | 1 page ]) includes all expenditures net on- and off-farm expenses, including food, clothing, toiletries, utilities, transportation, health, education, and entertainment. The average total household expenditure for all surveyed households was 66,985 baht (US$1,723)¹. On average, there was no significant difference in total expenditure by organic and conventional farmers, except in the poorest quintile, where organic farmers spent slightly less than conventional farmers. Total household expenditure increased by approximately 15,000 baht per quintile until the eightieth percentile. The largest increase was from the second richest quintile to the richest quintile, in which total expenditure more than doubled. The top quintile represented the larger farms and farms with high non-farm incomes.

Although their total household expenditures were similar, Figure 1 [ PDF 132.2KB | 1 page ] and Appendix Table 1 [ PDF 9.2KB | 1 page ] show that the organic and conventional farmers' spending varied by expenditure category. On average, conventional households had higher medical expenditure than organic households, yet spent significantly less on education and household operations. Overall, the two groups had similar levels of expenditure on food; tobacco and alcohol; personal care; clothing; and fuel, transportation, and communications.

A potential problem arises, however, if the incidence of catastrophic expenditure is based on OOP payments as a share of total household expenditure. As the majority of resources in poor households are devoted to subsistence expenses and few resources are available for healthcare, the budget share of OOP payments in poor households may appear to be low (Wagstaff et al. 2007). The actual magnitude of the effect of OOP payments on the welfare of poor households may be better measured as a share of discretionary expenditure—total household expenditure net spending on basic necessities. Following the approach of a number of authors, non-food expenditure is used as an approximation for discretionary expenditure (Van Doorslaer et al. 2007; Wagstaff et al. 2007).

The average household spent 14,859 baht (30% of total expenditure), or approximately 1,200 baht per month, on food (Table 3 [ PDF 14.6KB | 1 page ]). Although organic households in the poorest, middle, and second richest quintiles spent slightly less on food than conventional households, the overall difference in the food expenditure of the two groups was limited. Annual food expenditure increased by approximately 4,000 baht per quintile. However, consistent with Engel's law, the poor spent a significantly higher proportion of their household expenditure on food. On average, the poorest quintile devoted 36% of household expenditure to food, compared with only 17% by the richest quintile.

Given this severe budget constraint of poor households, discretionary expenditure may better distinguish between rich and poor households and provide a more accurate measure of the impact of health spending on the poor households than household expenditure (Table 4 [ PDF 14.6KB | 1 page ]). Among all surveyed households, discretionary expenditure averaged 52,129 baht, with no significant difference between the organic and conventional groups. While the trend per quintile is similar to total household expenditure, the difference between the poorest and richest quintiles is significantly more pronounced, as discretionary spending by the rich was nearly 15 times that of the poor.

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1. Gabby
   (posted 21 January 2009 / 04:39:21 PM)
   
   this is a good contributon to understand the link between health outcomes and occupations...