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Fears of Meat Shortages and 30% Price Hikes as World's Largest Supplier is Crippled in Russian Cyber Attack
Daily Mail
Tue June 1, 2021
The US could be hit with beef shortages and price rises after the world's largest meat producer was forced to close slaughterhouses due to a cyber attack the White House has blamed on Russian hackers.
JBS - which supplies 20 per cent of all beef and pork in the US - warned the Memorial Day weekend hack could disrupt its supply chains and increase prices up up to 30 per cent, because of the United States' reliance on its production lines.
JBS beef and pork plants in Ottumwa, Iowa; Worthington, Minnesota; Cactus, Texas; and Greeley, Colorado announced on Facebook that they were canceling their 'kill and pack' shifts on Tuesday. It is unclear when those plants will resume operations.
The attack also caused JBS's Australian operations to shut down on Monday. JBS sells meat under 52 different brand names in the US, including Certified Angus Beef, 5 Star Reserve, Blue Ribbon Angus Beef and Pilgrim's.
The company, the world's largest meatpacker, said it was working to resolve the incident, which has stopped livestock slaughter in JBS plants in several US states.
It has refused to share further details of the ransomware attack, other than to say it had impacted company servers. JBS would not comment on how that had limited its capacity to slaughter animals and pack meat.
A spokesman said the firm notified the Biden administration and that the Federal Bureau of Investigation has launched an inquiry.
'On Sunday, May 30, JBS USA determined that it was the target of an organized cybersecurity attack, affecting some of the servers supporting its North American and Australian IT systems,' it said in a Monday statement.
The Biden administration, meanwhile, has reportedly offered assistance to JBS.
White House Principal Deputy Press Secretary Karine Jean-Pierre said that the administration is 'engaging directly with the Russian government on this matter and delivering the message that responsible states do not harbor ransomware criminals.'
DailyMail.com has reached out to the Russian government seeking comment.
JBS controls about 20 per cent of the slaughtering capacity for US cattle and hogs, according to industry estimates.
JBS reported the incident a few weeks after a ransomware attack on Colonial Pipeline, the largest fuel pipeline in the United States, crippled fuel delivery for several days in the US Southeast.
That hack caused days of misery for drivers, as fuel pumps ran dry amid panic-buying of gas. A $4.4 million ransom was paid after the May 7 attack, their CEO confirmed.
The attack on JBS also comes at a time of rising meat prices as China increases imports, food costs rise and plants continue to face labor shortages that started during the COVID-19 pandemic.
The cyberattack could push US beef prices even higher by tightening supplies, said Brad Lyle, chief financial officer for consultancy Partners for Production Agriculture.
The average unit price for US fresh beef in April rose by 5 per cent from March and was up about 10 per cent from a year earlier, according to NielsenIQ data.
Pork and chicken prices are each up about 5.4 per cent from last year.
US inventories of frozen beef at the end of April were 5 per cent lower than a year earlier, while frozen pork supplies were down 26 per cent, according to the US Department of Agriculture.
Any impact on consumers would depend on how long production is impacted, said Matthew Wiegand, a risk management consultant and commodity broker at FuturesOne in Nebraska.
'If it lingers for multiple days, you see some food service shortages,' Wiegand said.
'The good thing is that this happened after Memorial Day. You are on the downhill side of summer demand and summer bookings.'
Two kill and fabrication shifts had been canceled at JBS's beef plant in Greeley, Colorado, due to the cyber attack, representatives of the United Food and Commercial Workers International Union Local 7 said in an e-mail.
JBS Beef in Cactus, Texas, also said on Facebook it would not run on Tuesday - updating an early post that had said the plant would run as normal.
The United States Cattlemen's Association, an industry group, said on Twitter that it had reports of JBS redirecting livestock haulers who arrived at plants and were to unload animals for slaughter.
Last year, cattle and hogs backed up on US farms and some animals were euthanized when meat plants shut due to COVID-19 outbreaks among workers.
JBS Canada said in a Facebook post that shifts had been canceled at its plant in Brooks, Alberta, on Monday and one shift so far had been canceled on Tuesday.
Scott Payne, spokesman for United Food and Commercial Workers Canada Union Local 401, said: 'There are no unionized workers there. That means effectively the plant's operations have shut for the day.'
The JBS packaging facility in Belleville, Ontario - where beef, pork and salmon are prepared for grocery stores - was operating normally, said Tim Deelstra, a spokesman for UFCW Canada Local 175.
In Australia, JBS's entire beef and lamb kills were cancelled across the nation, affecting facilities in Queensland, Victoria, New South Wales and Tasmania.
JBS said in a statement that the 'organized cybersecurity attack' was detected on Sunday, 'affecting some of the servers supporting its North American and Australian IT systems.'
They continued: 'The company took immediate action, suspending all affected systems, notifying authorities and activating the company's global network of IT professionals and third-party experts to resolve the situation.
'The company's backup servers were not affected, and it is actively working with an Incident Response firm to restore its systems as soon as possible.'
JBS said they did not believe that 'any customer, supplier or employee data has been compromised or misused as a result of the situation.'
The company warned that delays may be likely.
'Resolution of the incident will take time, which may delay certain transactions with customers and suppliers,' they said.
JBS, which has its North American operations headquartered in Greeley, Colorado did not respond to additional questions about the cyberattack. A representative in Sao Paulo said the company's Brazilian operations were not impacted.
A JBS beef plant in Grand Island, Nebraska, said only workers in maintenance and shipping were scheduled to work on Tuesday due to the cyberattack.
'We continue to work through the situation and will keep you informed regarding production on Wednesday,' the Facebook post from Grand Island, Nebraska, said.
The JBS cyberattack spurred a new round of support for improved cyber security.
Congressman Rick Crawford, an Arkansas Republican, called for a bipartisan effort to secure food and cyber security.
'Cyber security is synonymous with national security, and so is food security,' he wrote on Twitter.
Paul Rosenzweig, a former senior Department of Homeland Security official, told USA Today that the attacks on an oil pipeline and then a meat supplier 'shows that nothing is safe.'
'Not the meatpacking industry, not the chemical industry, not the wastewater treatment industry... Nothing,' he said.
'And the only way to be safe in this world is to unplug completely. And you can't do that and be economically competitive.'
Rosenzweig, a Cybersecurity and Emerging Threats senior fellow at the non-partisan R Street Institute public policy research organization in Washington, said that the success of the Colonial Pipeline cyberattack has emboldened hackers.
'Until they actually pay consequences, they'll keep doing it,' he said.
'I mean, the Colonial guys got away with $50 million or whatever it was – not bad for a week's work.
'Who knows what the JBS guys might get away with?
'So long as the internet is a place of anonymity, the criminals will be able to act with impunity.
'And why would they stop?'
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