A massive hacking incident against beef processing giant JBS caused an estimated 20% of U.S. beef packing plants to grind to a halt earlier this week. JBS was quick to get things back online, but the attack raises questions about cyber security and market consolidation.
Cattle ranchers across the region have expressed concerns about certain companies getting too much power and affecting too much of the market. According to USDA estimates, only four companies control about 80% of the beef processing market.
鈥淚 think there鈥檚 a concern in the cattle industry of putting all your eggs in just too few baskets,鈥� said Eric Belasco, an agricultural economics professor at Montana State University.
Belasco added that streamlined processes can be good for ranchers, but disruptions aren鈥檛.
鈥淲hile they do enjoy economies of scale delivering some of these products to consumers at lower prices. I think also the volatility from having this concentration is a growing concern,鈥� he said.
Beyond that, lawmakers like Montana Sen. Jon Tester for renewed investigations into the largest beef processors, including JBS, for price fixing during the chaos of the pandemic. That is, allegations the companies used plant slowdowns to pay ranchers even less and made more off of sales.
Tester said in a statement that 鈥�...this (cyber) attack is a perfect example of why continued consolidation in the meat industry poses such a direct threat both to Montana鈥檚 ranchers and consumers and to our national security. Due to irresponsible market consolidation, a single incident can threaten our nation鈥檚 entire food supply, giving our adversaries an easy target and causing significant disruptions across the country.鈥�
The North American Meat Institute s argued that they need ranchers as much as ranchers need them, though, and that antitrust regulations have successfully kept them from getting too big. They also that the market is doing fine, and that independent packers are growing in number, though it鈥檚 still a small overall percentage.
鈥淭he Meat Institute will continue to work with livestock producer organizations to ensure proposed changes to the beef markets do not have unintended consequences for producers and consumers,鈥� they said in a statement.
The U.S. Department of Justice didn鈥檛 respond to questions about the status of their investigation, but had been investigating alleged beef price fixing last year without any word about when the investigation might wrap up.
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