By David Winning
A ransomware attack against JBS SA sent shock waves throughout
the U.S. food industry even as some of the meatpacker's plants
restarted, pushing up wholesale meat prices while complicating
livestock deliveries from farms.
Brazil-based JBS, the world's biggest meat company by sales,
said it expected most of its plants to be operational on Wednesday.
Many workers were told via social media to report to their normally
scheduled shifts at JBS' meat plants across the U.S., though some
plants suspended early shifts and some processing operations.
The attack this week knocked out production at plants that
process nearly a quarter of the beef and a fifth of the pork
produced in the U.S. Chicken plants operated by Pilgrim's Pride
Corp., a JBS subsidiary, were also affected. The outages are the
latest blow to a meatpacking industry that is also contending with
labor shortages and high costs for transport and animal feed.
Wholesale prices for beef and pork rose following the attack,
and meat buyers said price increases for consumers would likely
follow if problems persisted. Prices for choice cuts of beef sold
in boxes on Tuesday rose by $3.59 to $334.56 per hundred pounds,
the biggest increase in nearly a month, according to U.S.
Department of Agriculture data.
John Stevens, director of purchasing for G&C Foods, a
supplier to restaurant distributors, said he expected prices to
climb further if plant outages continue. "The longer it goes the
more we'll see," he said.
Mr. Stevens said he spent Tuesday fielding calls from restaurant
distributors racing to find alternative supplies of the beef, pork
and chicken they typically order from JBS and Pilgrim's. G&C,
which purchases millions of pounds of meat and poultry from the
companies each year, bought meat from other meatpackers, and might
ration deliveries to customers if supplies tighten in coming days,
he said.
"There's only so much volume to go around," Mr. Stevens said. He
said JBS told him that orders for meat already on the road would be
delivered, but that it was unclear if or when other orders in the
pipeline would arrive. JBS said that nearly all of its U.S. plants
delivered products on Tuesday.
The USDA said it had contacted several major meat processors to
encourage them to add capacity where possible. The agency said it
would continue to encourage U.S. food and agriculture companies to
take steps to protect their information technology and supply chain
infrastructure.
Meat supplies were already tight before the cyberattack. Surging
demand from reopening restaurants, along with production problems
at meat plants, are driving up costs of bacon, chicken wings and
other products as people continue to make big grocery purchases.
Some restaurants and supermarkets have raised prices for consumers
as a result.
Distributor Gordon Food Service Inc. bought meat from other
suppliers Tuesday while JBS plants were offline, said Jagtar
Nijjar, Gordon's director of imports and commodities. Mr. Nijjar
said he expected it to take four business days for its normal order
flow from JBS to resume. Normally, he said, Gordon gets more than
half of its pork from JBS, at least half a million pounds every
week.
"We're grabbing product from every other source," Mr. Nijjar
said.
U.S. cattle producers, meanwhile, said they were waiting to
learn whether they would be able to deliver animals to JBS plants
on schedule this week. Dave Stevenson, general manager of Red Rock
Feeding Co. in Red Rock, Ariz., said he was unsure whether he would
be able to deliver more than 70 cattle to a JBS plant near Phoenix
as planned on Friday. Animals he had shipped to a JBS plant in Utah
on Monday were still waiting to be slaughtered on Tuesday, he
said.
The United Food and Commercial Workers International Union,
which represents over 25,000 JBS meatpacking workers, called on the
company to ensure all its workers would continue to receive pay as
plant shutdowns continue. A JBS spokesman said workers will be paid
according to the terms of the company's contract.
The cyberattack hit JBS operations outside the U.S. as well. The
company's Canadian beef operations on Wednesday were set to resume
normal slaughtering and processing operations, the company told
workers in a notice posted on Facebook.
In Australia, several thousand meat workers temporarily stood
down on Wednesday while JBS worked to bring operations in the
country back to full capacity, said Matt Journeaux, an official at
the Australasian Meat Industry Employees' Union.
"They have no idea when this is going to be rectified or if
there is any end in sight," he said.
The Australian arm of JBS uses the same computer system as the
company in the U.S., which is why operations in both countries were
affected, said David Littleproud, the country's agriculture
minister.
Mr. Littleproud said processing of beef, lamb and pork was
disrupted by the attack, the latest blow to Australia's meat
industry after a prolonged drought reduced livestock numbers. JBS
accounts for roughly a quarter of Australia's red-meat
processing.
"It's also important to understand it's not just JBS that's
impacted by this, it goes right back to the farm gate and obviously
they're working as hard as they can to make sure that there's
continuity in that supply chain," Mr. Littleproud said.
Australian authorities are meeting with U.S. law-enforcement
agencies to pinpoint the source of the attack, Mr. Littleproud
said. White House principal deputy press secretary Karine
Jean-Pierre said Tuesday that JBS reported that the attack
originated from a criminal group likely based in Russia.
David Winning and Jaewon Kang contributed to this article.
Write to David Winning at david.winning@wsj.com
(END) Dow Jones Newswires
June 02, 2021 12:19 ET (16:19 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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