MANILA, Philippines -- Agriculture Secretary Arthur Yap has expressed confidence that Vietnam will participate in Monday’s rice tender as it has pledged to fulfill its commitment to an earlier agreement with the Philippines.

In an interview, Yap said Hanoi officials had assured the Philippines that Vietnam will stand by its commitment to supply as much as 1.5 million metric tons of rice by participating in tenders conducted by the National Food Authority.

The two governments signed an agreement last March in which the Hanoi government pledged its best efforts to continue supplying rice this year subject to available supply in spite of a limit to exports. Hanoi was reported to have extended its ban on rice exports until June.

"On the contrary, I have received word from Hanoi officials last week, signifying their interest in [Monday’s] bidding, but added that they will go soft in joining the tenders," Yap noted.

The agriculture chief was reacting to reports that Vietnam was unlikely to join the tender. Thailand announced earlier that it will not be able to participate in the bidding because of new NFA rules that conflict with its own laws.

The NFA requires traders participating in Monday’s tender to submit sovereign guarantees in place of performance and bid bonds. This will assure the Philippines of faithful compliance by traders to the contracts and will make foreign governments liable for any damages to the Philippines should the traders fail to deliver.

Vietnamese officials said Hanoi does not issue such guarantees for private traders.

"Hanoi officials explained that when they supply huge volumes to the Philippines, this tends to drive their local rice prices up, but it doesn't mean they will shy away from their commitment to us," Yap said.

Rather, they explained that by going soft, this means that Vietnam will not supply huge volumes to the Philippines at one time to prevent Hanoi rice prices from climbing and thus drive inflation higher, Yap added.

Yap noted that Vietnam was urging the Philippines to explore an alternative mode of rice procurement, which the Department of Agriculture is currently studying.

"What is important right now is that the Philippines is in a flexible, comfortable position as it enters (Monday’s) tender, especially since the 10-percent gap had already been contracted," Yap said. "The additional volumes we are going to procure from Monday onwards will be for our buffer stocks from September until December."

After conducting four tenders, the Philippines has already contracted as much as 1.6 million tons from Vietnam, Thailand, Pakistan, and the United States. The DA has set an import quota of 2.1 million tons for government procurement and another 600,000 tons for private-sector importation.

"Now we are going to enter the lean months with a comfortable 32-day buffer stock and we will strive to maintain a 30-day buffer stock until the end of the year," he added.

As per policy, the NFA is tasked to maintain a 15-day rice stockpile at any given time, and a 30-day buffer stock during the traditional lean months of July to September.

Yap added that the DA will also be more aggressive in its procurement of palay from local farmers this year. He said earlier that if the NFA can procure as much as 10 percent of the local palay production in 2008, "it must do so."

The DA targets palay production to reach 17.3 million tons, up from last year's 16.24 million tons.

Over the past two years, however, the NFA has only bought one percent of local production since it is the prerogative of farmers to sell their palay to traders who offer higher prices. Last month, President Gloria Macapagal-Arroyo increased NFA’s buying price of palay to P17 a kilo.