Slaughterhouse closures spread after cyberattack on meat producer | Business and Economy News


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

JBS’s five biggest U.S. beef plants, which combined handle 22,500 cattle a day, have halted meat processing, according to company Facebook posts, employees and labor unions, following the Sunday attack on the company’s computer networks. Slaughter operations in Australia had already been halted, according to a trade group, and one of Canada’s largest beef plants was idled for its second day on Tuesday.

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 U.S. alone, JBS accounts for almost a quarter of all beef capacity and nearly a fifth of all pork capacity. Livestock futures slumped.

The Brazilian meat giant shut its North American and Australian computer networks after an organized assault on Sunday on some of its servers, the company said by email. 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.”

JBS closed meat processing facilities in Utah, Texas, Wisconsin and Nebraska and canceled 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 U.S. have also been canceled. Pork and chicken facilities across the nation are also being closed by the owner of Pilgrim’s Pride Corp., the second biggest U.S. chicken producer, according to union officials and employees.

JBS didn’t provide comment on U.S. plant closures, though the company said its Brazilian plants are operating normally.

JBS’s shares rose 1.4% in Sao Paulo, compared with the 1.5% gain for Brazil’s Ibovespa benchmark index. Chicago cattle futures slumped as much as 3.4% to the lowest levels since Jan. 12, before trimming losses to about 1%. The potential slaughterhouse closures at JBS plants exacerbated an existing supply glut, with too many cattle than the capacity to process them.

The U.S. 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 2%.

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

JBS USA’s beef and pork units and Pilgrim’s Pride had net revenue of about $40 billion in 2020, according to company filings. The division includes operations in U.S., 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 Co., the operator of the biggest U.S. gasoline pipeline, was targeted in a ransomware attack. It’s also happened as the global meat industry battles lingering Covid-19 absenteeism after recovering from mass outbreaks last year 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.”

The cyber assault affected the Canadian beef plant in Brooks, Alberta, about 190 kilometers (118 miles) east of Calgary, with shifts canceled on Monday and Tuesday, according to Scott Payne, spokesman for United Food and Commercial Workers Canada Union Local 401. The plant processes 30% of Canada’s federally inspected cattle, according to the Canadian Cattlemen’s Association.

A JBS packaging facility in Belleville, Ontario, where beef, pork and salmon are prepared for grocery stores, was operating normally, Tim Deelstra of UFCW Canada Local 175 said Monday. In the U.S., the UFCW Local 7 posted on Facebook that kill and fabrication shifts A and B were canceled for June 1. The Local 7 membership includes 3,000 workers at JBS in Greeley, Colorado.

JBS owns facilities in 20 countries. The U.S. accounts for half of the company’s revenue, while Australia and New Zealand represent 4% and Canada accounts for 3%, according to company fillings. The company also has operations in South America and Europe.

Backup Servers Fine

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

The Australian Cyber Security Centre is providing technical assistance to JBS, while Agriculture Minister David Littleproud has said the government is working with international partners trying to trace, rectify and prosecute where possible, those who perpetrated the attack.

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.

–With assistance from Jason Scott, Sybilla Gross, Michael Hirtzer, Marcy Nicholson, Alyza Sebenius and Lydia Mulvany.





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