Packing industry faces labor shortage

Workers at the Sam Kane beef slaughterhouse in Corpus Christi, Texas on June 10, 2008 dissect, sort and separate beef parts. U.S. Department of Agriculture (USDA) Food Safety and Inspection Service (FSIS) inspectors are on site to ensure the beef is processed in accordance with USDA FSIS regulations. 

While the U.S. was busy with a weekend of honoring those who lost their lives in military service, a Russian hacker group targeted meat processor JBS SA in a ransomware cyberattack. The attack halted operations first at the company’s Australian plants, and then its North American plants.

Australia’s operations were shuttered Monday, but the U.S. had already planned for limited slaughter due to the Memorial Day holiday. This gave U.S. plants some time to recover for Tuesday slaughter, but operations were still frozen that day, and were only partly operational Wednesday. The company’s South America operations remained unaffected.

JBS said the company acted immediately after the attack Sunday, May 30, “suspending all affected systems, notifying authorities, and activating the company’s global network of IT professionals and third-party experts to resolve the situation.” The company’s backup servers were not affected and no customer, supplier or employee data were compromised, JBS said.

By Tuesday, the company said there had been significant progress in resolving the cyberattack.

“We have cybersecurity plans in place to address these types of issues and we are successfully executing those plans,” said Andre Nogueira, JBS USA CEO. “Given the progress our IT professionals and plant teams have made in the last 24 hours, the vast majority of our beef, pork, poultry and prepared foods plants will be operational tomorrow [June 2].”

The company said it was able to ship out product from nearly all of its facilities to supply customers on June 1, although actual plant operations were halted.

On June 2, the FBI released a statement on the incident, attributing the crime to the Russia-linked group REvil, or Sodinokibi. The group is the most widespread ransomware threat and preys on high-profile companies and people. Just a few weeks earlier, the group was linked as the cyberattacker on Colonial Pipeline, which halted energy operations.

“We have attributed the JBS attack to REvil and Sodinokibi and are working diligently to bring the threat actors to justice,” the FBI statement said. “We continue to focus our efforts on imposing risk and consequences and holding the responsible cyber actors accountable.”

The White House said the FBI is investigating the incident and the Cybersecurity and Infrastructure Security Agency (CISA) is offering support to JBS.

“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,” said U.S. Deputy Press Secretary Karine Jean-Pierre in a press briefing June 1.

“We’re assessing any impacts on supply, and the president has directed the administration to determine what we can do to mitigate any impacts as they may become necessary,” Jean-Pierre said.

Impacted slaughter

JBS processes nearly 20 percent of beef production in the U.S. Although there was no definite report of which facilities were affected, news reports suggest as many as nine plants experienced shutdowns. This includes plants in Arizona, Colorado, Michigan, Nebraska, Pennsylvania, Texas, Utah and Wisconsin.

A couple thousand head were slaughtered on Monday, which was to be expected with the holiday. However, slaughter on Tuesday reached only 94,000 head, compared to the typical level of about 120,000 head. Wednesday’s slaughter marked about 105,000 head, still below usual daily levels.

Through Wednesday afternoon, slaughter totaled 201,000 head, compared to a week earlier, when slaughter had already reached 357,000 head—and was still considered a light slaughter week.

After remaining relatively stable and potentially reaching their summer peak, boxed beef prices shot up in response to the incident. Cutouts jumped nearly $10 apiece in just two days. As of Wednesday afternoon, the Choice cutout was reported at $340.16 and the Select cutout at $311.88. Fears remain about what lingering impact the event could have on wholesale beef prices—especially at a time when there is already a large disparity between beef and fed cattle prices.

On June 2, JBS announced they were on schedule to resume production at all facilities on Thursday, June 3. “Today, the vast majority of our facilities resumed operations as we forecast yesterday, including all of our pork, poultry and prepared foods facilities around the world and the majority of our beef facilities in the U.S. and Australia,” Nogueira said. 

In response to the event, U.S. Cattlemen’s Association (USCA) penned a letter to Secretary of Transportation Pete Buttigieg, requesting immediate relief for livestock and meat transporters.

“After reviewing reports from our members regarding the impact of the JBS outage, USCA strongly believes this event warrants immediate regulatory action to ensure grocery store shelves stay stocked of fresh meat products,” the letter read.

The association ended its letter by requesting the Federal Motor Carrier Safety Administration provide emergency regulatory flexibility for motor carriers and drivers hauling live animals or meat products. — Anna Miller, WLJ managing editor


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