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Fresh Produce

Russia 'In Contact With US' Over Cyberattack On Meat Supplier JBS

Russia has made direct contact with the United States regarding a ransomware attack on Brazil's JBS SA, the Interfax news agency quoted Deputy Foreign Minister Sergei Ryabkov as saying on Wednesday morning.

The attack on the world's largest meatpacker, which disrupted meat production in North America and Australia, is believed to have originated from a criminal organisation that is likely to be based in Russia, the White House commented on Tuesday.

Ransomware Attack

The meatpacking giant cancelled shifts at its US and Australia meat plants after the attack, which threatens to disrupt food supply chains and further inflate food prices. It caused JBS's Australian operations to shut down on Monday.

"On Sunday, May 30, JBS USA determined that it was the target of an organised cybersecurity attack, affecting some of the servers supporting its North American and Australian IT systems," it said in a statement on Monday.

The company has not responded for additional request for comment on the nature of the attack or why meat production is being impacted. JBS controls about 20% of the slaughtering capacity for U.S. cattle and hogs, according to industry estimates.

JBS reported the incident a few weeks after a ransomware attack on Colonial Pipeline, the largest fuel pipeline in the United States, crippled fuel delivery for several days in the U.S. Southeast.

Rising Meat Prices

The attack also comes at a time of rising meat prices as China increases imports, food costs rise and plants continue to face labor shortages that started during the COVID-19 pandemic.

The cyberattack could push U.S. beef prices even higher by tightening supplies, said Brad Lyle, chief financial officer for consultancy Partners for Production Agriculture.

The average unit price for U.S. fresh beef in April rose by 5% from March and was up about 10% from a year earlier, according to NielsenIQ data. Pork and chicken prices are each up about 5.4% from last year.

U.S. inventories of frozen beef at the end of April were 5% lower than a year earlier, while frozen pork supplies were down 26%, according to the U.S. Department of Agriculture.

Any impact on consumers would depend on how long production is impacted, said Matthew Wiegand, a risk management consultant and commodity broker at FuturesOne in Nebraska.

"If it lingers for multiple days, you see some food service shortages," Wiegand said. "The good thing is that this happened after Memorial Day. You are on the downhill side of summer demand and summer bookings."

Two kill and fabrication shifts had been canceled at JBS's beef plant in Greeley, Colorado, due to the cyber attack, representatives of the United Food and Commercial Workers International Union Local 7 said in an e-mail. JBS Beef in Cactus, Texas, also said on Facebook it would not run on Tuesday -- updating an early post that had said the plant would run as normal.

The United States Cattlemen's Association, an industry group, said on Twitter that it had reports of JBS redirecting livestock haulers who arrived at plants and were to unload animals for slaughter.

Last year, cattle and hogs backed up on U.S. farms and some animals were euthanized when meat plants shut due to COVID-19 outbreaks among workers.

Canada Impact

JBS Canada said in a Facebook post that shifts had been canceled at its plant in Brooks, Alberta, on Monday and one shift so far had been canceled on Tuesday.

JBS, which recently reported a strong first quarter, did not respond to additional questions about the cyberattack. A representative in Sao Paulo said the company's Brazilian operations were not impacted.

The JBS cyberattack spurred a new round of support for improved cyber security.

Congressman Rick Crawford, an Arkansas Republican, called for a bipartisan effort to secure food and cyber security.

"Cyber security is synonymous with national security, and so is food security," he wrote on Twitter.

News by Reuters, edited by ESM. For more Fresh Produce stories, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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