Buyers of Meat Scurry Hobbles JBS Following Cyberattack
The company anticipates that the majority of its meat-packing facilities will be operational by Wednesday.
JBS SA JBSAY 4.16 percent was hit by a ransomware attack that shut down a large portion of beef and pork processing in the United States, forcing buyers to seek alternative sources of supply and increasing pressure on meat supplies.
The attack added to the strains already present in the food supply chain due to labor shortages, production constraints, and high transportation costs. Late Tuesday, a JBS executive stated that the company was making progress toward restoring its systems and that the majority of its meat plants would reopen on Wednesday.
JBS, the world's largest meat company by sales, informed the Biden administration on Tuesday that it had been the victim of a ransomware attack. According to her, JBS reported that the attack was carried out by a criminal group based most likely in Russia.
“The White House is directly engaging the Russian government on this issue and communicating the message that responsible states do not harbor ransomware criminals,” Ms. Jean-Pierre said.
JBS made no comment on how the White House described the attack.
The attack is the latest in a series that has targeted a variety of businesses and institutions, including hospitals, the oil industry, and municipal water systems.
According to worker representatives and notices distributed to JBS employees, the attack halted operations at several of the company's largest meat plants in the United States. Several JBS facilities in Colorado, Iowa, Minnesota, Pennsylvania, Nebraska, and Texas were impacted.
JBS operations in Australia and Canada, as well as in the United States, were impacted, according to the company and individual plants. so Analysts for the meat industry said plant closures as a result of the JBS hack could soon result in higher consumer prices, which have risen for numerous cuts this year due to strong demand and a tight labor market. “Even a single day of disruption will have a significant impact on the beef market and wholesale beef prices,” wrote analysts for the meat industry research firm Steiner Consulting Group.
Suzanne Rajczi, CEO of New York restaurant supplier Ginsberg's Foods, said she was looking for a new source for chicken after previously purchasing it from a West Virginia plant operated by Pilgrim's Pride Corp. PPC -0.25 percent, which is majority-owned by JBS.
As a result of the attack, Pilgrim's canceled a fresh chicken delivery to Ginsberg's on Tuesday, Ms. Rajczi said. She stated that Pilgrim's informed her that it was attempting to reintroduce production lines in the coming days but could not guarantee when or if her deliveries would resume.
“There is a great deal of frenetic buying going on right now,” Ms. Rajczi explained. “The entire fresh-commodity supply chain has been strained to the breaking point.” JBS said it shipped products from nearly all of its US facilities on Tuesday. In a statement, the United States Department of Agriculture urged competing meatpackers to ramp up processing wherever possible while JBS's plants were unavailable and to secure their own technology systems.
For JBS, which processes nearly a quarter of all beef produced in the United States and roughly one-fifth of all pork produced in the country, the attack demonstrates a new threat to an industry that was among the hardest hit by Covid-19. When the pandemic reached the United States, tens of thousands of plant workers were infected, according to labor union estimates, forcing plant closures last spring, causing livestock shortages on farms. Meatpackers invested hundreds of millions of dollars in temporary wage increases, temperature scanners, and partitioning workstations.
The attack demonstrates
The attack demonstrates the growing and potentially costly threat that such incursions pose to corporate operations. Such attacks can also have a direct impact on daily life in the United States. Last month, a cyberattack on fuel supplier Colonial Pipeline Co. shut down the company's primary fuel conduit for the United States' East Coast, sparking a run on regional gas stations and pushing gasoline prices to their highest level in 612 years. Since the Colonial attack, lawmakers have warned that criminal ransomware gangs are increasingly targeting critical infrastructure and businesses in the United States, wreaking havoc on day-to-day operations.
JBS stated that the cyberattack did not affect its backup servers and that the company was restoring its systems with the assistance of technology specialists. JBS stated late Tuesday that there was no indication of a breach of customer, supplier, or employee data. Earlier this month, the company warned that the attack could cause delays in dealings with meat buyers, cattle feedlots, and other suppliers. According to the company, the attack had no effect on its operations in Mexico or the United Kingdom.
“Our systems are being restored and we are devoting all available resources to combat this threat,” Mr. Nogueira stated. posts on social media.
According to Wendell Young, president of the local United Food and Commercial Workers International Union, which represents JBS plant employees, no slaughtering or processing took place Tuesday at a JBS beef plant in Souderton, Pa.
Shifts were canceled in Greeley, Colo., where JBS operates another major beef-packing plant, a spokeswoman for the local UFCW chapter said. According to a notice posted on the plant's Facebook page, the JBS beef plant in Cactus, Texas, has also canceled Tuesday operations, with the exception of maintenance and certain other functions.
Slaughtering and bacon-slicing shifts
According to a separate Facebook notice, the JBS pork plant in Ottumwa, Iowa, informed employees that Tuesday slaughtering and bacon-slicing shifts had been suspended. Cutting, trimming, and deboning shifts were suspended Tuesday at JBS's other pork plant in Worthington, Minn., according to a notice posted on the plant's Facebook page.
The Chicago Mercantile Exchange's live cattle futures market fell on Tuesday, with the most active cattle contract closing down 1.9 percent to nearly $1.17 a pound. According to livestock traders, the primary factor driving the contract down was the hack, which increased the risk that some plants would be unable to purchase livestock.
“Cattle were backed up going into this week due to packers simply not killing enough to keep feedlots current,” Dennis Smith, a commodities broker with Archer Financial Services Inc., explained. “As a result, the industry was predisposed to fail during the crisis.”
JBS stated that the attack targeted a portion of its information technology and that it has since suspended use of the affected servers.
While attacks on information technology systems can cause havoc, cybersecurity experts warn that hackers can cause even more havoc if they gain access to the operational technology that keeps factories and other industrial facilities running.