JBS said on Tuesday that operations are returning to normal after a cyberattack shut down plants.- Just one day of disruption can impact the
meat supply chain. - The industry faces layers of disruption, from labor shortages to lingering effects of the pandemic.
A cyberattack on the largest meat supplier in the world came at a potentially catastrophic time for the meat supply chain.
On Monday, JBS announced that a
"Our systems are coming back online and we are not sparing any resources to fight this threat," Andre Nogueira, JBS USA CEO, said in a statement late Tuesday.
By Wednesday, operations were back on track at most US slaughterhouses - a far more positive outcome than what could have been, according to meat industry expert Anne-Marie Roerink.
"In a way, this situation is much like the Colonial pipeline, where the severity of the impact will much depend on the duration of the disruption and on where you are in the country," Roerink told Insider on Tuesday. "While even one day of disrupted production causes ripples in the supply chain, a lengthier disruption could seriously impact beef and pork prices."
The attack highlights the delicate nature of the meat supply chain in the US. With the attack coming on Memorial Day weekend - a major event for grilling - hackers timed the disruption to coincide with a time when stores are placing orders to refill the meat case, Roerink said.
Meat prices are already up compared to 2020, with Morning Brew reporting that pork prices were up 4.8% and beef prices were up 3.3% in April. The market for beef has been tight in recent weeks, Roerink said, and supply disruptions could drive prices even higher.
Multiple factors are behind the limited supply and increased prices. The pandemic threw the supply chain out of whack, as slaughterhouses shut down due to workers catching COVID and restaurant demand disappeared.
"Stack on top of that the disruptions in the plants, on top of that the ongoing issues with labor and transportation and now more supply chain disruptions," Roerink said.
The result is an environment in which further disruptions - even if the only impact one company - can drive up prices across the US.
Last year highlighted the tenuous nature of the supply chain, and how much it depends on a few major players. Some politicians are calling for increased scrutiny of the dominance of companies like JBS, Tyson, and Cargill. Last week, members of Congress publicly urged the US Department of Justice to provide updates to an antitrust investigation into the largest meatpackers in the US.
"Cattle producers, especially small feeders, are again experiencing difficult conditions that are threatening their ability to stay in business," reads the letter, which was signed by members of Congress including South Dakota Senator John Thune and Iowa Senator Chuck Grassley. "With a tight supply chain, any changes in processing capacity can have a dramatic impact on cattle prices, preventing producers from capturing margin from boxed beef rallies."