The world's largest meat producer stopped work in the United States due to a hacker attack: what will happen to prices

The world's largest meat processing company has undergone a sophisticated cyberattack. JBS's computer networks were compromised, temporarily shutting down some businesses in Australia, Canada and the United States, affecting thousands of workers. Air force.

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The company believes the ransomware attack came from a criminal group likely based in Russia, the White House said.

The attack could lead to scarcity of meat or higher prices for consumers. In a ransomware attack, hackers infiltrate the computer network and threaten to disrupt or delete files if the ransom is not paid.

The White House says the FBI has begun an investigation into the attack.

“JBS has notified the White House that the ransom demand is coming from a criminal organization likely based in Russia,” White House spokeswoman Karine Jean-Pierre said June 1.

The White House is now working with the Russian authorities on this issue.

“We hope that responsible states do not harbor criminal extortionists,” she added.

Russian Deputy Foreign Minister Sergei Ryabkov confirmed that the Biden administration had contacted Moscow to discuss the cyberattack on JBS.

On the subject: Gasoline prices skyrocket after major pipeline hacked in US

JBS: From Regional Player to International Corporation

• JBS is the world's largest meat supplier with more than 150 plants in 15 countries.
• The company was founded in Brazil in 1953 by rancher Jose Batista Sobrinho.
• The company currently employs over 150 people worldwide.
• His clients include supermarkets and the McDonald's chain.
• In the US, JBS processes nearly a quarter of the country's beef and one-fifth of its pork.

After the attack, JBS said it had made "significant progress" in cleaning up the damage and said it hoped the vast majority of its plants would be operational today.

On May 31, the company said it had suspended all affected IT systems as soon as the attack was detected and that the backup servers had not been compromised.

The United Food and Trade Union, which represents the workers at the JBS plant, called on the company to ensure that employees are paid in full despite the downtime.

IT systems in modern meat processing plants are used at several stages, including invoicing and delivery.

According to trade group Beef Central, "supermarkets and other large end users such as McDonald's will be among the hardest hit customers due to their need for constant supplies."

In the United States, home to JBS's five largest beef factories, according to Bloomberg, the attack brought a fifth of meat production to a standstill. Plants in Australia and Canada were also affected.

At the same time, the attack did not affect the company's activities in South America.

What will happen to prices

Analysts said the cyberattack would not have an immediate impact on US prices. NPR... But if the suspension of production at JBS USA's five factories lasts more than a week, then consumers can expect to pay a little more for a t-bone steak.

“Given the progress our IT and manufacturing teams have made over the past 24 hours, the vast majority of our beef, pork, poultry and processed foods plants will be operational tomorrow,” said Andre Nogueira, CEO of JBS USA, late Tuesday. June.

“We are sparing no resources to combat this threat. We have cybersecurity plans in place to address such issues and we are successfully executing those plans,” Nogiera said.

He added that the massive disruptions did not halt the company's shipping operations, saying the company "was able to ship products from almost all of its facilities for delivery to customers."

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Fuel delivery to the southeastern United States was halted for several days last month due to ransomware attacksaimed at Colonial Pipeline. Investigators argued that the attack was also linked to a group of hackers from Russia.

Colonial Pipeline has confirmed that it has paid a $ 4,4 million ransom to the cybercriminal group.

The US government previously advised companies not to pay criminals for ransomware attacks, as this would lead to more hacks in the future.

Even without cyberattacks, the meat market is unstable

The US is already seeing near-record high meat prices due to a surge in demand exacerbated by the pandemic, said Alton Kahlo, chief economist at Steiner Consulting Group.

Last year, many of the country's slaughterhouses and meat processing plants were forced to shut down as factory workers contracted the coronavirus. According to Kahlo, unpredictability has led to a new kind of price volatility that hadn't happened before. In addition, the demand for meat has skyrocketed, he said, as more and more people cook at home.

As a result, he noted, "even small changes will have consequences."

The two-day closure of JBS has wiped out nearly a fifth of the nation's beef, pork and poultry production, he said. In addition, on June 1, the USDA reported a 22% decline in beef production and an approximately 19,5% decline in pork production, which Kahlo said “pretty much coincided” with a JBS-sized production hole in the market. ...

Typically, he said, with short-term supply shortages, retailers are reluctant to change prices drastically because this could have unintended consequences for consumer behavior.

Wholesalers are also alarmed

John Freed, general manager of Canyon Wholesale Provisions in Los Angeles, said it would be a huge relief if JBS resolved the problem quickly, but looked a little skeptical.

He noted the chaos that followed the recent ransomware attack on the Colonial Pipeline just a few weeks ago.

“If this goes on for any length of time, it will be terrible,” he said, adding that his family business “always has orders from JBS.”

Any interruption in delivery could damage the stores and restaurants that rely on him, he said. Freed also wondered about the long-term financial implications for his company if JBS decided to yield to the attacker's demands and pay the ransom, as Colonial did.

“Who ultimately pays for this?” - he asked.

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