JBS Foods cyber attack highlights need for more local processing capacity
POWELL — Brazillian-owned JBS Foods was hit with a ransomware attack recently that shuttered a number of the international conglomerates’ processing facilities. Fortunately, the company was able to resume operations within a few days.
JBS controls 25 percent of the meat processing in the U.S. so a prolonged shutdown can have far-reaching impacts on producers.
Since the disruption was brief, it won’t likely impact Wyoming producers, said Jim Magagna, executive vice president for the Wyoming Stockgrowers Association.
“I don’t want to say it can’t have an impact, but it doesn’t look likely,” Magagna said.
However, Magagna said the issue highlights the problem of having 80% of America’s processing capacity controlled by four large conglomerates, of which JBS is one.
During last year’s COVID-19 pandemic, a number of meat processing facilities were shut down, creating problems for meat producers who couldn’t get their livestock to market, as well as shortages at grocery stores.
Cyber attacks are just another threat that can have such extensive disruptions.
“It’s another wake up call that we need a broader array of meat processing,” Magagna said.
Kenton Murray, co-owner of Willwoodbased Murraymere Farms, agrees there’s a serious need for more local processing capacity.
Murraymere processes as much as it can with local processors, such as Roger’s Meat north of Powell, but the demand for these smaller processors is so high, they are all booked up to a year out.
Even when the large packers are operating at full capacity, the processing concentration in four large companies gives them a lot of power over the market. When small Wyoming producers are trying to get their cattle to market, they’re at the mercy of whatever bids the big packers offer.
“You can just take it or leave it,” Murray said. “And when they feel the market’s too high, they just simply won’t put out any bids until they can break the market to where they get to a price they’re happy with. And then they buy as many cattle as they can.”
He said the pending expansion of the Legacy Meats processing plant in Cody is a welcome development. When it’s operational, the bigger plant still won’t begin to meet the demand, but “it’s a step in the right direction,” Murray said.
Dave Peterson, owner of the Proud Cut in Cody, is also planning a processing plant on the south side of Powell, which will also help increase the capacity.
Even then, it’s not quite enough, and for the foreseeable future, producers will have to rely on the large packers.
Murray said it’s all the more reason for them to increase cyber security.
“I hope they take this seriously and stop this from happening again,” Murray said.
He also thinks it’s important to require country-of-origin labeling on meat sold in the U.S.
Any foreign beef that’s sold in America requires the USDA label, but that doesn’t guarantee the meat was produced in the United States; it only shows the federal government has approved the meat for sale.
Aside from the brief disruption at JBS, Magagna said things in the meat market are looking good for the time being. Beef demand is strong, and futures are up, as are exports.
“I think it’s a sign of optimism,” Magagna said.