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U.S. Meat Supply Recovering as JBS Plants Return After Hack (1)

June 3, 2021, 10:24 PM

Meat production in the U.S. is climbing back toward normal levels, with the government pressing other companies to boost output while JBS SA’s meat plants recover from last weekend’s cyberattack.

JBS said late Thursday that lost production would be fully recovered by the end of next week. “All of our facilities around the globe are operating at normal capacity,” Andre Nogueira, JBS USA’s chief executive officer, said in the statement.

Cattle-slaughtering in the U.S. had essentially returned to normal Thursday, with 120,000 head slaughtered, just 1,000 less than a week earlier, according to the U.S. Agriculture Department. The USDA said earlier this week that it had reached out to other meat producers to encourage them to boost their output as much as possible.

The attack on JBS and ensuing shutdowns upended agricultural markets and raised concerns about food security as hackers increasingly target critical infrastructure. Wholesale meat prices are at the highest level since the early days of the pandemic last year, and cattle futures swung wildly amid speculation of how long the shutdowns might last.

LISTEN: Texas Democratic Congressman Henry Cuellar who serves as the co-chair of the Congressional Beef Caucus discusses the U.S. response to the cyberattack against JBS and the impact to global meat supply. He spoke with Bloomberg’s Emily Wilkins and Jeanne Sheehan Zaino.

More of JBS’s beef plants were running at least one shift Thursday, including one in Cactus, Texas, which was resuming normal schedules, according to an official Facebook post.

JBS in its statement Thursday said its encrypted backup servers were not infected and allowed for a return to operations sooner than expected.

Still, at least some plants were initially doing operations manually, meaning logistical labor like packaging and accounting for cattle would be a challenge, according to workers who asked not to be named because they are not authorized to speak for the company.

“There’s a lot of automation, there’s a lot of reliance on technology,” said Wendell Young, head of the United Food and Commercial Workers’ local union representing 1,500 members at JBS’s beef slaughterhouse in Souderton, Pennsylvania. “You can disconnect some of those wires and switches and run things old-school, but before you do, you want to make sure that everything’s running smoothly.”

The weekend cyberattack forced the Brazilian food giant to shut down all of its beef plants in the U.S. -- accounting for almost a quarter of American supplies -- and slow pork and poultry production. Slaughtering operations across Australia were halted and at least one Canadian plant was idled. JBS, which has facilities in 20 countries, also owns Pilgrim’s Pride Corp., the second-biggest U.S. chicken producer. The extent of the outages may never be known as JBS didn’t detail the impact.

The JBS Beef Production Facility in Greeley, Colorado.

The road to recovery has proven long for many companies subjected to ransomware attacks. Colonial Pipeline Co. had to shut the largest fuel pipeline in the U.S. for nearly a week last month, causing shortages at filling stations, and some regional supply chains struggled for several weeks.

The White House in a memo said corporate leaders should immediately develop plans to counter the attacks, including offline backups to crucial information. There are no USDA cybersecurity regulations or requirements for meatpackers, a U.S. official said.

READ MORE: Commodity Firms’ M&A Binge Creates Big, Tempting Hacker Targets

In Texas, workers returning on Wednesday also had to deal with issues like cattle left in freezers longer than usual, potentially rendering them inedible. Employees also are seeking full confirmation that their personal data housed by JBS wasn’t compromised. The company has said it’s not aware of any evidence that customer, supplier or worker data has been leaked.

WATCH: JBS is said to resume production in all facilities on Thursday.
(Source: Bloomberg)

Live cattle futures in Chicago have steadied after falling to touch a near five-month low on Tuesday. Choice-grade wholesale beef has jumped 2.9% this week to the highest since the record prices of last May, when Covid-19 closed U.S. beef plants, and wholesale pork prices were up 3.9%, USDA data showed. JBS shares fell 1.5% Thursday in Sao Paulo.

“Even temporary closures can have a big impact and we saw that with JBS,” U.S. Representative Cheri Bustos, an Illinois Democrat, said in a phone interview Thursday.

(Updates with JBS statement in second paragraph)

--With assistance from Mike Dorning, Lydia Mulvany, Marcy Nicholson and Jason Scott.

To contact the reporters on this story:
Kim Chipman in Chicago at kchipman@bloomberg.net;
Michael Hirtzer in Chicago at mhirtzer@bloomberg.net;
Elizabeth Elkin in New York at eelkin4@bloomberg.net

To contact the editors responsible for this story:
David Marino at dmarino4@bloomberg.net

Millie Munshi

© 2021 Bloomberg L.P. All rights reserved. Used with permission.

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