WORLD’S LARGEST MEAT SUPPLIER HALTS U.S. OPERATIONS AFTER CYBERATTACK

JBS USA, the largest global meat producer, shut down processing at its five biggest beef plants in the United States after a cyberattack this weekend, and it’s unclear when they’ll be back up and running. This attack will probably affect production globally, as well.

In the meantime, shoppers may want to brace themselves for yet another possible supply shortage, this time with meat.  Does fallout from the attack mean a tighter meat supply ahead, and as a result, higher prices?  That depends on how quickly the issue is resolved, according to experts.  “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.

“The attack could also limit pork supply availability and push up pork prices in the near term,” Steiner said.  The group noted that “we think this is a major issue but much will depend on how long the disruption persists.”

“Retailers and beef processors are coming off a long weekend and need to catch up with orders and make sure to fill the meat case.  If they suddenly get a call saying that product may not deliver tomorrow or this week, it will create very significant challenges,” Steiner explained.

Karine Jean-Pierre, White House principal deputy press secretary, told reporters aboard Air Force One that JBS USA told the White House a “criminal organization likely based in Russia” was responsible for the attack. “The White House isengaging directly with the Russian government on this matter and delivering the message that responsible states do not harbor ransomware criminals,” Jean-Pierre added.

The attack came a little over three weeks after Colonial Pipeline suffered a cyberattack that shut down operations and created an oil shortage on the East Coast.  Reports said Sunday’s attack on JBS USA impacted servers that support North American and Australian IT systems, prompting the suspension of all affected systems.

JBS USA said in a statement that the backup servers were not affected by the attack and the company is working with an Incident Response firm to restore systems as soon as possible.  “Resolution of the incident will take time, which may delay certain transactions with customers and suppliers,” the statement added.

The cyberattack on JBS prompted reminders of the recent attack on Colonial Pipeline. Also believed to be the work of a group of Russian hackers, it prompted the shutdown of the 5,500-mile pipeline. Running from the Gulf Coast to New Jersey, the pipeline is key in moving oil across the country and the shutdown caused runs on gas and shortages.

Outages continued for about a week before Colonial Pipeline was able to resume operations and the company drew criticism for reportedly paying $5 million in ransom. Paying that sum may have emboldened hackers to strike bigger targets, former senior Department of Homeland Security official Paul Rosenzweig, told USA Today.  “So long as the internet is a place of anonymity, the criminals will be able to act with impunity,” Rosenzweig added. “And why would they stop?”  

Alexandra Jaffe, a reporter of the Associated Press, noted on twitter that the FBI is investigating and the U.S. Department of Agriculture was reaching out to major meat processors in the United States.

Before the pandemic, Americans might have been shocked by the idea of a meat shortage.  But the last year exposed the limitation of the country’s meat supply chain, which is highly concentrated among a handful of suppliers, including JBS USA.  Early in the pandemic, workers got sick at crowded meatpacking facilities, leading plants to temporarily close their doors. The disruption caused prices to soar and led to spot shortages.

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