Plantations, poverty and power - Critical Information Collective

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Advance Agro, Thailand: Deforestation, debt and a murky corporate structure
Advance Agro is Thailand’s biggest pulp and paper company. The company has two pulp mills with a
total production capacity of 580,000 tons a year and three paper plants with a total capacity of 600,000
tons a year.
Advance Agro was founded in 1989 by the Dumnernchanavit family. The company is part of the
agribusiness Soon Hua Seng (SHS) Group, which was founded in the 1950s by members of the
Dumnernchanavit family. Soon Hua Seng started growing eucalyptus on a commercial scale in the late
1980s. Advance Agro was listed on the Stock Exchange of Thailand in 1995. In 2006, Advance Agro’s
profit amounted to 1.97 billion Baht. 182
In addition to pulp and paper, Advance Agro also generates a total of 108 MW of electricity, using wood
waste and black liquor as fuel. 183 The company does not generate all its own energy and buys some
electricity from a coal-fired power station. 184
The company exports 60 per cent of its paper to Hong Kong, China, Australia, and Europe. 185 In 2003,
Advance Agro used 50 per cent of its pulp to produce paper. Five per cent was sold in Thailand and the
remainder exported to Australia, China, Korea, and Malaysia among others. 186
The company claims not to have any impact on native forests in Thailand, conveniently forgetting that in
1990 company employees were caught red-handed clearing forest to make way for eucalyptus
plantations. 187 Advance Agro’s plantations have been one factor leading to the deforestation of large areas
of eastern Thailand. Other factors include road building (partly built during the war in Indochina to link
bases for US troops with the port at Chon Buri and also to access Cambodia’s forests), and promotion of
large-scale industrial agriculture by the government with support from the World Bank. One of the
beneficiaries of these policies was Soon Hua Seng, Advance Agro’s parent company. 188
When Advance Agro’s subsidiary Agro Lines started establishing its eucalyptus plantations, villagers
found they could no longer grow rice in neighbouring fields. The company bought villagers’ farmland in
Prachinburi to convert the land to plantations. Allegations of intimidation of villagers surrounded the
182 “Advance Agro Pulbic Company Limited”, Stock Exchange of Thailand, website accessed 6 December 2007.
http://www.set.or.th/set/companyinfo.dotype=profile&symbol=AA&language=en&country=US
183 “Opinions of Independent Financial Advisor for the delisting of AA”, 30 November 2007.
http://www.set.or.th/set/newsdetails.dofilename=dat%2Fnews%2F200712%2F07043448.e07++++++++++++++++++&h
eadline=Opinions+of+IFA+for+the+delisting+of++AA&type=H&symbol=AA&time=1196925840000&language=&count
ry=
184 “Environmental Benefits of Double A Paper“, Access Economics, May 2007.
http://www.accesseconomics.com.au/publicationsreports/showreport.phpid=125
185 “Thailand’s Advance Agro rating raised to ‘B-’ after completion of debt restructuring”, Thai Press Reports, 10 June
2004.
186 “TRIS rating assings ‘BBB’ rating to ‘Advance Agro’ with ‘stable’ outlook”, Thai Press Reports, 20 October 2004.
187 Keith Barney (2005) “At the Supply Edge: Thailand’s Forest Policies, Plantation Sector, and Commodity Export
Links With China“, Forest Trends, Center for International Forestry Research, The York Center for Asian Research, pages
1-2. http://www.forest-trends.org/documents/publications/Thailand%20Report%20New.pdf
188 Chris Lang (2003) “Thailand: Eucalyptus, encroachment, deforestation and pollution linked to pulp and
paper company”, World Rainforest Movement Bulletin no 70, May 2003. http://chrislang.org/2003/05/10/thailandeucalyptus-encroachment-deforestation-and-pollution-linked-to-pulp-and-paper-company/