While the world’s largest meat processing company is getting back online after production around the world was disrupted by a cyberattack, what remains to be seen is the impact on consumers and restaurants.
Brazil’s JBS SA said late Tuesday that it had made “significant progress” in dealing with the cyberattack and expected the “vast majority” of its plants to be operating Wednesday. “Our systems are coming back online and we are not sparing any resources to fight this threat,” said Andre Nogueira, CEO of JBS USA, according to The Associated Press.
Meantime, beef prices rose, as reported by CNBC. The U.S. Department of Agriculture reported prices for choice cuts of beef ticked up 1.1% to $334.56 per hundred pounds Tuesday.
On Tuesday, BMO Capital Markets analyst Andrew Strelzik said he expects the pricing environment to return to normal once plants fully return to production. “We do not anticipate meaningful margin implications for restaurants assuming a relatively quick resolution,” he said, according to CNBC.
Experts quoted by CNN say the cyberattack’s impact on the country’s meat supply will depend on how long it takes to resolve the issue.
“Even one day of disruption will significantly impact the beef market and wholesale beef prices,” Steiner Consulting Group, which specializes in commodity prices, wrote in a note Tuesday.
In the United States, at least, that’s partially because of the high demand for burgers and other beef products during Memorial Day weekend.
Steve Meyer, an economist with commodity firm Kerns and Associates, told CNN a one- or two-day disruption could cause wholesale meat prices to jump. But if the problem is resolved within a few days, restaurants and grocery stores are unlikely to pass those costs on to consumers.
On Tuesday, the White House said JBS had notified the U.S. of a ransom demand from a criminal organization likely based in Russia. White House principal deputy press secretary Karine Jean-Pierre said the White House and the Department of Agriculture have been in touch with the company several times this week.
JBS is the second-largest producer of beef, pork and chicken in the U.S. If it were to shut down for even one day, the U.S. would lose almost a quarter of its beef-processing capacity, or the equivalent of 20,000 beef cows, according to Trey Malone, an assistant professor of agriculture at Michigan State University.
The closures reflect the reality that modern meat processing plants are heavily automated, for both food- and worker-safety reasons. Computers collect data at multiple stages of the production process, and orders, billing, shipping and other functions are all electronic.
JBS, which has not stated publicly that the attack was ransomware, said the cyberattack affected servers supporting its operations in North America and Australia. Backup servers weren’t affected and it said it was not aware of any customer, supplier or employee data being compromised.
JBS plants in Australia resumed limited operations as of Wednesday in New South Wales and Victoria states, Agriculture Minister David Littleproud said. The company hoped to resume work in Queensland state on Thursday, he said.
JBS is the largest meat and food processing company in Australia, with 47 facilities including abattoirs, feedlots and meat processing sites.
Littleproud said his department and Australian law enforcement officials were due to meet with their counterparts in the U.S. on Wednesday.
Even before the attack, U.S. meat prices were rising due to coronavirus shutdowns, bad weather and high plant absenteeism. Malone said the disruption could further raise meat prices ahead of summer barbecues. The U.S. Department of Agriculture estimates beef prices will climb 1% to 2% this year, poultry as much as 1.5% and pork 2% to 3%.
JBS, which is a majority shareholder of Pilgrim’s Pride, didn’t say which of its 84 U.S. facilities were closed Monday and Tuesday because of the attack. It said JBS USA and Pilgrim’s were able to ship meat from nearly all of its facilities Tuesday. The company also said it was making progress toward resuming plant operations in the U.S. and Australia. Several of the company’s pork, poultry and prepared foods plants were operational Tuesday and its Canada beef facility resumed production, it said.
Earlier Tuesday, a union official confirmed that two shifts at the company’s largest U.S. beef plant, in Greeley, Colorado, were canceled. Some plant shifts in Canada were also canceled Monday and Tuesday, according to JBS Facebook posts.
Jean-Pierre said the White House “is engaging directly with the Russian government on this matter and delivering the message that responsible states do not harbor ransomware criminals.” The FBI is investigating the incident, and the Cybersecurity and Infrastructure Security Agency is offering technical support to JBS.
In addition, USDA has spoken to several major meat processors in the U.S. to alert them to the situation, and the White House is assessing any potential impact on the nation’s meat supply.
JBS has more than 150,000 employees worldwide.
It’s not the first time a ransomware attack has targeted a food company. Last November, Milan-based Campari Group said it was the victim of a ransomware attack that caused a temporary technology outage and compromised some business and personal data.
In March, Molson Coors announced a cyber attack that affected its production and shipping. Molson Coors said it was able to get some of its breweries running after 24 hours; others took several days.
Ransomware expert Brett Callow, a threat analyst at the security firm Emsisoft, said companies like JBS make ideal targets.
“They play a critical role in the food supply chain and threat actors likely believe this increases their chances of getting a speedy payout,” Callow said.
Such attacks can wreak havoc. Last month, a gang of hackers shut down operation of the Colonial Pipeline, the largest U.S. fuel pipeline, for nearly a week. The closure sparked long lines and panic buying at gas stations across the Southeast. Colonial Pipeline confirmed it paid $4.4 million to the hackers.
Jason Crabtree, the co-founder of QOMPLX, a Virginia-based artificial intelligence and machine learning company, said Marriott, FedEx and others have also been targeted by ransomware attacks. He said companies need to do a better job of rapidly detecting bad actors in their systems.
“A lot of organizations aren’t able to find and fix different vulnerabilities faster than the adversaries that they’re fighting,” Crabtree said.
Crabtree said the government also plays a critical role, and said President Joe Biden’s recent executive order on cybersecurity — which requires all federal agencies to use basic security measures, like multi-factor authentication — is a good start.
The Associated Press contributed to this report.
About the Author
