JBS Systems Coming Back Online After Ransomware Attack

Jacob Bunge reported on the front page of Wednesday’s Wall Street Journal that, “Meatpacker JBS SA was hit by a ransomware attack that took a big chunk of U.S. beef-and-pork processing offline, sending buyers scrambling for alternatives and raising pressure on meat supplies.

“The attack ratcheted up pressure on a food-supply chain already under strain from labor shortages, production constraints and high transportation costs. Late Tuesday, a company executive said JBS was making progress toward restoring its systems, and that the majority of its meat plants would be operational Wednesday.

“Brazil-based JBS, the world’s biggest meat company by sales, told the Biden administration that it was the victim of a ransomware attack, White House principal deputy press secretary Karine Jean-Pierre said on Tuesday. She said JBS reported that the attack originated from a criminal group likely based in Russia.”

Mr. Bunge noted that, “At JBS, the attack halted operations at meat plants that are among the largest in the U.S., according to worker representatives and notices shared with JBS employees. JBS facilities in Colorado, Iowa, Minnesota, Pennsylvania, Nebraska and Texas were among those affected.

“JBS operations in Australia and Canada were affected as well as operations in the U.S., according to the company and individual plants’ social-media posts.”

The Journal article added that, “Meat-market analysts said plant closures resulting from the JBS hack could soon lead to higher consumer prices, which have climbed for many cuts this year because of high demand and a tight labor market. ‘Even one day of disruption will significantly impact the beef market and wholesale beef prices,’ wrote analysts for Steiner Consulting Group, which researches the meat industry.”

Bloomberg writers Mike Dorning, Fabiana Batista, and Sybilla Gross reported on Wednesday that, “JBS SA, the world’s largest meat producer, has made ‘significant progress‘ to resolve the cyberattack that hit its global operations and will have the ‘vast majority’ of its plants operational on Wednesday.

“‘Our systems are coming back online and we are not sparing any resources to fight this threat,’ JBS USA Chief Executive Officer Andre Nogueira said in a statement late Tuesday. A union Facebook post said a shift at Greeley in Colorado was set for a regular production day on Wednesday.

“The cyberattack forced the shutdown of all of JBS’s U.S. beef plants, which account for almost a quarter of American supplies, according to an official with the United Food and Commercial Workers International Union, which represents workers at the company’s plants in the U.S. All other JBS meatpacking facilities in the country experienced some level of disruption, according to the official.”

The Bloomberg writers explained that, “So far, it’s unclear what the impact on meat prices will be from this latest attack. Retailers don’t always like hiking prices on consumers and may try to resist, according to Michael Nepveux, an economist with the American Farm Bureau Federation. ‘How long it goes on will impact to what level consumers start to see something at the grocery stores,’ he said in a phone interview.

“Livestock producers could see some of the more immediate blow. Chicago cattle futures slumped as much as 3.4% Tuesday, before trimming losses. The slaughterhouse closures are exacerbating an existing supply glut of animals.”

“In Asia, the country most at risk from any prolonged shutdown is China, the world’s biggest beef importer. Beef prices are already near a record, and any lengthy supply disruption could push up prices even more and stoke food inflation fears. About 30% of JBS’s export revenue comes from Greater China.

And Washington Post writers Hamza Shaban, Ellen Nakashima and  Rachel Lerman reported on Tuesday that, “Experts say it’s too soon to determine how the JBS cyberattack will affect meat supply chains — a significant concern for an industry that has been battered by a wave of disruptions that predate the coronavirus pandemic.”

On Wednesday, Reuters News reported that, “JBS SA employees were scheduled to return to U.S. meat plants on Wednesday, a day after the company’s beef operations stopped following a ransomware attack.”

“U.S. beef and pork prices are already rising as China increases imports, animal feed costs rise and slaughterhouses have confronted a labor shortage since COVID-19 outbreaks shut down many U.S. meat plants,” the Reuters article said.