JBS cyber attack: Ransom of $US11m paid by global meat giant

The US arm of global meat giant JBS paid out a multimillion-dollar ransom to hackers who attacked its operations, halting production. Here’s more on the confirmation from JBS USA.

A JBS processing plant stands dormant in Greeley, Colorado, last Tuesday. JBS has confirmed it paid $US11 million ($14.2 million) to hackers. Picture: Chet Strange/Getty Images/AFP

UPDATE: JBS USA has confirmed it paid $US11 million ($14.2 million) in ransom after its operations were the target of a recent cyber attack.

According to a statement issued by the company, at the time of payment the vast majority of JBS’s facilities were operational.

JBS made the decision to pay the ransom in consultation with internal IT professionals and third-party cyber security experts.

JBS USA chief executive Andre Nogueira said it was a “very difficult decision to make for our company”.

“However, we felt this decision had to be made to prevent any potential risk for our customers”.

US beef prices jump as international markets react to shut down

Wholesale beef prices have jumped as much as AU40-60c/kg in the United States last week in response to a cyber ransomware attack that disabled meat processing plants owned by meat company giant JBS.

Meanwhile JBS announced from its US office that all of its global facilities are fully operational after resolution of the criminal cyber attack.

The statement last Friday said its “robust IT systems and encrypted backup servers allowed for a rapid recovery”.

“As a result, JBS USA and Pilgrim’s were able to limit the loss of food produced during the attack to less than one days’ worth of production,” it said.

“Any lost production across the company’s global business will be fully recovered by the end of next week, limiting any potential negative impact on producers, consumers and the company’s workforce.”

JBS USA chief executive Andre Nogueira said the “criminals were never able to access our core systems, which greatly reduced potential impact”.

“Today, we are fortunate that all of our facilities around the globe are operating at normal capacity, and we are focused on fulfilling our responsibility to produce safe, high-quality food.”

The hack that put the world’s largest red-meat processor out of action in the US, Canada and Australia is suspected to have originated from a criminal organisation, likely based in Russia, and was being investigated by authorities including the FBI and Australian Federal Police.

The company announced last Thursday, from its US office, that it was on schedule to resume production at all of their facilities by Friday last week, at “close to full capacity”.

Independent Australian meat analyst and trader Simon Quilty said last Thursday that JBS’s rapid response to the ransomware attack meant the “wheels of commerce” could soon start turning again.

Meat analyst and trader Simon Quilty.

However, the attack had disrupted the global meat market and had produced meat price rises in the US market, he said.

It was also likely to lead to ongoing volatility in pricing, the Victorian-based expert said.

The hack also served as a significant “wake up call” for the global meat market, Mr Quilty said, as it exposed processors and exporters as being a “soft target” when it came to cyber crime.

Meat production was, innately, “time sensitive” he said, and therefore companies needed to respond rapidly to any attacks.

Mr Quilty pointed to a similar attack in New Zealand last April which shut down a meat company for 10 days. He said hackers could install a computer virus in an IT system and it could lie dormant and hidden for many months before being triggered.

“These hackers can infiltrate and put a virus in the system, then sit on it, and then it is not until 18 months later they activate it,” he said.

“The complexity of trying to manage these risks is difficult given these timelines.”

Mr Quilty said EMSISoft antivirus data estimated ransomware cost at least $51 billion, across all industries from cyber attacks on companies in 10 western countries, including the US and Australia, just last year.

Last month a major US pipeline was shut down by a ransomware attack that caused major disruptions to fuel supplies and pushed US fuel prices up across the US East Coast, highlighting the risk ransomware poses to critical industries.

Regarding the impact on cattle and meat markets, Mr Quilty said “one can only assume, given the involvement of the FBI and Australian authorities that JBS did not pay any ransom”.

Mr Quilty said the JBS shutdown produced a 17 per cent drop in the number of cattle slaughtered during the past week in the US and a 14 per cent drop for US hogs slaughtered.

“JBS is a major player in North America, it makes up 23 per cent of the US cattle (slaughter) capacity and 18 per cent of US pork capacity,” he said.

“Meat prices (wholesale) in America this week jumped US15-20c/pound (AU14-28c/kg) and on the lean end, on 90CL, they were up US5-10c/pound (AU42-60c/kg),” he said.

“I don’t think in Australia the ramifications have been as obvious as the market has been in a holding pattern; we did see some short coverings this week on fresh trims and prices were paid up early in the week, Monday and Tuesday, to make sure the orders were covered this week.

“To JBS’s credit they gave the assurances to a lot of their customers that they would have this issue resolved within days, not weeks.”

At the retail level Mr Quilty said it was “too short a time period” for a notable rise to be witnessed there.

“If the problem was to continue over several weeks I think that could be a possibility.

“It is a problem that has hit the wholesale part of the market.”

JBS’s fast response deserved “full credit” for responding so rapidly. “The impact on (Asutralian) cattle prices has (also been) somewhat minimal,” he said.

“The fact that cattle supplies have been so tight anyway, the impact has been absolutely minimal.”

Mr Quilty said disruptions like the cyber attack could lead to “volatility in pricing and does show the deep concerns in food security, globally”.

“But what is clear to me is once JBS gets its systems back up and running, it is business as usual, and the situation of rising global meat prices will continue, with or without this type of disruption.

“But what we do find is these types of disruptions lead to enormous volatility.”

The analyst predicted strong pricing to continue into next year due to protein deficits in China and tight supplies in Australia and New Zealand; the Argentina ban on exports, and lower Brazilian production numbers.

It came as JBS USA chief executive Andre Nogueira released a statement outlining that “the company’s rapid recovery from the cyberattack continued today, providing further assurance to more than 100,000 JBS USA and Pilgrim’s team members, livestock and poultry producer partners, customers and consumers”.

“JBS USA and Pilgrim’s continue to make significant progress in restoring our IT systems and returning to business as usual,” Mr Nogueira said.

“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 US and Australia.”

He said the company anticipated operating at “close to full capacity across our global operations tomorrow”.

Meanwhile in Australia, an Australian Meat Industry Council spokesman said today there had been no major impact on domestic and export supply from Australia.

AMIC chief executive Patrick Hutchinson said the Australian industry had a “very flexible supply chain, and it is practised at working together to manage these types of issues” and supply was “continuing as normal”.

“The strength and flexibility of the red meat and pork products supply chain has been demonstrated in the past,” Mr Hutchinson said.

“In areas such as market access issues and Covid-19 impacts.

“That is why we are world-renowned as the most reliable meat supply chain globally.”

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