JBS cyberattack results in market changes, consumer concerns
On May 30, a large cyberattack threatened the JBS meatpacking company. This attack impacted the beef markets in the weeks following. Now, nearly two weeks after the hack, industry leaders have been reflecting on the event.
Moments after
After the JBS cyberattack, company officials and White House leaders kept information private.
“The actual details or inside information has been very thin, which is totally understandable,” shares Nebraska Cattlemen’s Vice President of Marketing Jeff Stolle in a podcast on NewsRadio 1110 KFAB dated June 2.
Stolle continues, “From what we have been able to gather via various sources within the industry as well as various news sources, it appears that the JBS information technology (IT) systems were taken over – and held hostage if you will – by some criminal organizations or entity or person, nobody knows. But, this caused the largest player in the protein world to be essentially unable to operate.”
With cyberattacks becoming more prevalent in large infrastructures, JBS was able to learn from other recent attacks.
“In response to the attack, according to a company statement, JBS took immediate action, suspending all affected systems and calling on third-party experts to help resolve the problem,” shares Sierra Dawn McClain in a featured Capital Press article.
The attack on the United States food system targeted servers in North America and Australia.
McClain explains, “After the attack, JBS also temporarily shut down slaughter operations in Australia, altered shifts at some Canadian operations and canceled shifts at several plants across the U.S.”
McClain then shares the impact on U.S. packing plants, stating, “JBS’s five biggest beef plants in the U.S. have halted or slowed processing. These include plants in Colorado, Texas, Nebraska, Minnesota, Iowa and Pennsylvania.”
“At least this was short lived; it basically affected a day and a half of slaughter,” says Brad Kooima, commodities broker at Kooima Kooima Varilek Trading Inc., shedding light on the situation in the Cattle Call podcast published June 4.
He continues, “It does add a little bit to a problem we already had. It feels like we are not really selling as many cattle as we need too, at least not what we would expect with high feed prices.”
Statistics
With JBS being one of the largest packing facilities in the U.S., there were noticeable changes to the markets, including many consumer concerns.
Nebraska Cattlemen’s Vice President of Government Affairs Ashley Kohls shares an overview of U.S. packing facilities, noting, “Currently there are only four major processor markets for cattle and they control a vast majority of the feed cattle supply – it is around 70 percent of this supply.”
Because a majority of the cattle go to one of the four large packing companies, when one processor is under attack, there is a shift in the beef markets.
Explaining the impact, Kooima says, “JBS accounts for about 25,000 cattle per day in their nine different facilities and the impact was clear. On the Tuesday before the attack, the slaughter was 120,000. The Tuesday of the attack, it was 95,000. So, the 25,000 missing was right on the dot.”
He continues, “As JBS started to slowly come back online after having resolved their problem one way or another, we saw the slaughter come back up to 105,000.”
While most people are talking about how the cyberattack impacted the beef industry, there has been a different conversation around the impact on the pork industry. With so many pigs processed in the U.S. the impact to pork is surprisingly minimal.
“Five plants slaughter 80,000 to 90,000 hogs a day, which is a big deal – close to 18 or 20 percent of the overall US slaughter daily,” says Kooima.
To explain some of this difference, Kooima notes, “There is a number of these hog formula contracts where the cash is tied to, at least in part, to the pork product value.”
Still, two weeks after the large-scale attack, measures are being taken to resolve the issue.
McClain concludes, “The U.S. Department of Agriculture is assessing how the incident may impact the nation’s meat supply, including possible impacts for consumers and agricultural producers.”
Ransom paid
In a press release from JBS issued une 9, the company states, “JBS USA today confirmed it paid the equivalent of $11 million in ransom in response to the criminal hack against its operations.”
JBS worked with information technology professionals and a third-party cybersecurity company, ultimately making the difficult decision to pay the ransom in an effort to protect their consumers from potential risks.
The press release continues, “The company made the decision to mitigate any unforeseen issues related to the attack and ensure no data was exfiltrated.”
The Federal Bureau of Investigation considers this attack one of the most challenging cyberattacks to resolve, however there is still more to learn about the ransom.
JBS concludes, “Third-party forensic investigations are still ongoing, and no final determinations have been made. Preliminary investigation results confirm no company, customer or employee data was compromised.”
Savannah Peterson is an intern for the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.
