Employees walk at the JBS USA meat packing plant in Greeley, Colorado, the US, April 14 2020. Picture: REUTERS/SHANNON STAPLETON
Employees walk at the JBS USA meat packing plant in Greeley, Colorado, the US, April 14 2020. Picture: REUTERS/SHANNON STAPLETON

A cyberattack on JBS, the largest meat producer globally, has forced the shutdown of some of world’s largest abattoirs, and there are signs that the closures are spreading.

JBS’s five biggest beef plants in the US — which together handle 22,500 cattle a day — have halted processing after a weekend attack on the company’s computer networks, according to JBS posts on Facebook, labour unions and employees. Those outages alone have wiped out nearly a fifth of America’s production. Slaughter operations across Australia were also down, according to a trade group. One of Canada’s largest beef plants was idled for a second day.

It’s unclear exactly how many plants globally have been affected by the attack as JBS has yet to release full details.

The prospect of more extensive shutdowns around the world is already upending agricultural markets and raising concerns about food security as hackers increasingly target critical infrastructure. In the US, JBS accounts for about a quarter of all US beef capacity and roughly a fifth of all pork capacity. Livestock futures slumped while pork prices rose.

JBS suspended its North American and Australian computer systems after an organised assault on Sunday on some of its servers, the Brazilian meat giant said on Monday in an e-mailed statement. Without commenting on operations at its plants, JBS said the incident may delay certain transactions with customers and suppliers.

“Retailers and beef processors are coming from a long weekend and need to catch up with orders,” Steiner Consulting Group said in its Daily Livestock Report. “If they suddenly get a call saying that product may not deliver tomorrow or this week, it will create very significant challenges in keeping plants in operation and the retail case stocked up.”

The White House has offered assistance to JBS after the company notified the Biden administration on Sunday of a cyberattack from a criminal organisation likely based in Russia, White House deputy press secretary Karine Jean-Pierre told reporters on Tuesday. Biden has directed the administration to do whatever they can to mitigate the impact on the meat supply.

Any substantial disruption in meat processing would further stoke mounting political concerns about the concentration of the meat industry and complaints of the four giant companies that control more than 80% of US beef processing unfairly leverage their power over farmers and consumers.

Cattle producers were already seething over a surge in retail prices for hamburger and steaks while the prices processors pay for livestock barely budge. Congress has been examining legislation to address cattle markets and rural legislators recently pressed the justice department for action on an antitrust investigation of the beef industry launched in 2020.

JBS is the No 1 beef producer in the US, accounting for 23% of the nation’s maximum capacity compared to rival Tyson Foods’s 22% share, according to an investor report by Tyson.

JBS closed beef processing facilities in Utah, Texas, Wisconsin and Nebraska and cancelled shifts at plants in Iowa and Colorado on Tuesday, according to union officials and employees. Union Facebook posts also said some kill and fabrication shifts in the US have also been cancelled.

Pork and chicken facilities across the nation including one in Minnesota were also closed by the owner of Pilgrim’s Pride Corporation, the second-biggest US chicken producer, according to union officials and employees. At least five of the six US pork facilities were cutting back on operations on Tuesday, according to Facebook posts from the plants.

“There are at least 10 plants I have knowledge of that have had operations suspended because of the cyberattack,” said Paula Schelling-Soldner, acting chair for the national council of locals representing food inspectors for the American Federation of Government Employees. She declined to identify the locations of the operations.

The US department of agriculture’s midday reports for beef and pork didn’t disclose prices due to “packer submission issues”. However, the CME Group’s pork futures contract jumped by more than 3.5%.

Chicago cattle futures slumped as much as 3.4% to the lowest levels since January 12, before trimming losses to about 1.1%. The potential closures at JBS plants worsened an existing supply glut, with too many cattle than the capacity to process them.

JBS USA’s beef and pork units and Pilgrim’s Pride had net revenue of about $40bn in 2020, according to company filings. The division includes operations in the US, Canada, Australia, New Zealand, Mexico, Puerto Rico and Europe.

Hackers now have the commodities industry in their crosshairs with the JBS attack coming just three weeks after Colonial Pipeline, operator of the biggest US fuel pipeline, was targeted in a ransomware attack. It also happened as the global meat industry battles lingering Covid-19 absenteeism after recovering from mass outbreaks in 2020 that saw plants shut and supplies disrupted.

“While JBS has not confirmed that this is a ransomware attack it has all of the hallmarks of one,” said Allan Liska, senior security architect at cybersecurity analytics firm Recorded Future, who said that there has been more than 40 publicly reported ransomware attacks against food companies since May 2020. “The actual number is probably higher.”

JBS owns facilities in 20 countries. The US accounts for half of the company’s revenue, while Australia and New Zealand represent 4% and Canada accounts for 3%, according to company fillings. JBS also has operations in South America and Europe. Brazilian plants are operating normally, a company spokesperson said Tuesday by phone.

Backup servers  

Backup servers were not affected, and the company is working to restore systems as soon as possible, according to a statement from JBS USA on Monday. The processor said it’s not aware of any customer, supplier or employee data being compromised or misused.

JBS’s shares rose 1.4% in Sao Paulo, compared with the 1.5% gain for Brazil’s Ibovespa benchmark index.

JBS is the largest Australian meat and food processor with a portfolio of beef, lamb, pork, and value-added branded products, according to its website. It exports to more than 50 countries and its Dinmore facility is the biggest beef plant in the southern hemisphere. On the domestic market, the Australian Meat Industry Council said there is no indication that the attack will have a major impact on red meat and pork products supply.

Still, the shutdown is a big concern for exports if it drags on, said Matt Dalgleish, manager of commodity markets insights at Thomas Elder Markets, noting Australia ships overseas about 70% to 75% of red meat products from sheep and cattle. There is a risk to worldwide supplies too.

“If it’s a short term scenario, just a week or something that they’re offline, then it’s probably just a minimal hiccup,” said Dalgleish. But “given the size of JBS globally, if they were offline for any more than a week, then we’re going to see disruption to supply chains for sure”, he said.

Bloomberg News. More stories like this are available on bloomberg.com

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