By Jacob Bunge
Meatpacker JBS SA was hit by a ransomware attack that took a big
chunk of U.S. beef-and-pork processing offline, sending buyers
scrambling for alternatives and raising pressure on meat
supplies.
Brazil-based JBS, the world's biggest meat company by sales,
told the Biden administration that it was the victim of a
ransomware attack, White House principal deputy press secretary
Karine Jean-Pierre said on Tuesday. She said JBS reported that the
attack originated from a criminal group likely based in Russia.
"The White House is engaging directly with the Russian
government on this matter and delivering the message that
responsible states do not harbor ransomware criminals," Ms.
Jean-Pierre said.
JBS had no immediate comment on the White House's description of
the attack.
The attack against JBS is the latest in a growing number to hit
a range of businesses and institutions, including hospitals, the
oil industry and local water supplies.
At JBS, the attack halted operations at meat plants that are
among the largest in the U.S., according to worker representatives
and notices shared with JBS employees. JBS facilities in Colorado,
Iowa, Minnesota, Pennsylvania, Nebraska and Texas were among those
affected. Representatives for JBS had no immediate comment on plant
operations.
JBS operations in Australia and Canada were affected as well as
operations in the U.S., according to the company and individual
plants' social-media posts.
The attack ratcheted up pressure on a food-supply chain already
under strain from labor shortages, production constraints and high
transportation costs.
Meat-market analysts said plant closures resulting from the JBS
hack could soon lead to higher consumer prices, which have climbed
for many cuts this year because of high demand and a tight labor
market. "Even one day of disruption will significantly impact the
beef market and wholesale beef prices," wrote analysts for Steiner
Consulting Group, which researches the meat industry.
Suzanne Rajczi, chief executive of New York-based restaurant
supplier Ginsberg's Foods, said she was looking for a new source
for chicken she usually buys from a West Virginia plant operated by
Pilgrim's Pride Corp., which is majority-owned by JBS.
Pilgrim's canceled a fresh chicken delivery to Ginsberg's on
Tuesday as a result of the attack, Ms. Rajczi said. She said
Pilgrim's told her it was trying to add back production lines in
coming days but couldn't say if or when her deliveries would
resume.
"There's a lot of frenzied buying going on right now," said Ms.
Rajczi. "The whole fresh-commodity supply chain has been stretched
to the max."
For JBS, which processes nearly one-quarter of U.S. beef and
about one-fifth of the nation's pork, the attack illustrates a new
threat for an industry that was among the hardest hit by Covid-19.
As the pandemic arrived in the U.S., tens of thousands of plant
workers were infected, according to labor-union estimates, forcing
shutdowns last spring that backed up livestock on farms.
Meatpackers spent hundreds of millions of dollars to temporarily
boost wages, install temperature scanners and place partitions
between work stations.
The attack demonstrates the growing and potentially costly risk
to corporate operations posed by such incursions. Such attacks can
also affect daily life in the U.S. A cyberattack on fuel supplier
Colonial Pipeline Co. last month shut down the fuel supplier's main
fuel conduit for the U.S. East Coast, prompting a run on regional
gas stations and helping to push gasoline prices to their highest
levels in 6 1/2 years. Since the Colonial attack, lawmakers have
warned that criminal ransomware gangs are increasingly targeting
U.S. infrastructure and businesses, snarling day-to-day
operations.
JBS said the cyberattack didn't affect its backup servers, and
that the company was working with technology specialists to restore
its systems. As of Monday, JBS said there was no sign that
customer, supplier or employee data was compromised. JBS said the
attack could delay business with meat buyers, cattle feedlots and
other suppliers.
At a JBS beef plant in Souderton, Pa., which the company
estimates is the largest beef plant east of Chicago, workers were
told no slaughtering or processing would take place Tuesday,
according to Wendell Young, president of the local United Food and
Commercial Workers International Union, which represents JBS plant
employees.
"The goal is to reopen tomorrow, but until they notify us later
today, we don't know about that," Mr. Young said.
In Greeley, Colo., where JBS runs another major beef-packing
plant, shifts were canceled because of the cyberattack, a
spokeswoman for the local UFCW chapter said. The JBS beef plant in
Cactus, Texas, also canceled Tuesday operations, with the exception
of maintenance and some other functions, according to a notice
posted to the plant's Facebook page.
The JBS pork plant in Ottumwa, Iowa, told employees that Tuesday
slaughtering and bacon-slicing shifts were suspended, according to
a separate Facebook notice. In Worthington, Minn., where JBS runs
another pork plant, cutting, trimming and deboning shifts were
suspended Tuesday, according to a notice posted to that plant's
Facebook page.
Live cattle-futures trading on the Chicago Mercantile Exchange
fell on Tuesday, with the most-active cattle contract closing down
Tuesday by 1.9% to nearly $1.17 a pound. The primary factor driving
the contract down was the hack, livestock traders said, raising the
risk that some plants would be unable to purchase livestock.
"Cattle were backed up going into this week with packers simply
not killing enough to allow feedlots to get current," said Dennis
Smith, a commodities broker with Archer Financial Services Inc.
"So, the industry had a problem going into the crisis."
JBS said the attack targeted some of its information technology
and that the company has since suspended the use of affected
servers.
While attacks on IT systems can wreak havoc, cybersecurity
experts have said hackers can cause even greater damage if they
reach operational technology used to keep factories or other
industrial facilities running.
Tarini Parti, Jesse Newman and David Uberti contributed to this
article.
Write to Jacob Bunge at jacob.bunge@wsj.com
(END) Dow Jones Newswires
June 01, 2021 18:24 ET (22:24 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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