Washington Insider -- Wednesday

Cyberattack Impacts Major US Meatpacker

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Paycheck Protection Program (PPP) Closes to New Applications

The federal government's Paycheck Protection Program (PPP) closed to new applications Friday as funding was on track to be exhausted.

That marked the end of a $961 billion emergency effort that helped millions of small businesses survive the pandemic but included fraud claims and criticism that it did not reach the neediest businesses.

The program had been scheduled to end on May 31, but the Small Business Administration on Friday said in a notice to lenders that "due to the high volume of originations today, the portal will be closing for new originations that evening."

U.S. ag interests also fought details of the program in order to be considered eligible for the aid, and there were ag-specific enrollment opportunities during 2020 that afforded farm businesses to tap the aid.

Dairy Margin Coverage Payments Triggered Again in April

Dairy Margin Coverage (DMC) payments were triggered again in April as the difference between the national all milk price and the national average feed cost (margin) was below several of the producer-selected margin triggers.

The national margin for April was $6.94 per hundredweight (cwt), triggering DMC payments for those that elected Tier 1 margin coverage levels from $7 per cwt to $9.50 per cwt, and for those with Tier 2 margin coverage levels from $7 per cwt to $8 per cwt.

The payments range from $0.06 per cwt for those with $7 margin coverage to $2.56 for those with $9.50 per cwt margin coverage.

As of May 17, USDA said that an estimated $344 million had been paid out to dairy producers opting for the DMC program. Payments have been triggered for January-April this year.

Washington Insider: Cyberattack Impacts Major US Meatpacker

The ransomware attack that hit global meatpacker JBS affected its Australian and U.S. IT systems, and Politico is reporting that the company has told the White House they think it was a "criminal organization likely based in Russia." And the White House responded to the situation by prodding Russia on the situation, the second such major cyberattack on a U.S. company. "The White House is engaging directly with the Russian government on this matter and delivering the message that responsible states do not harbor ransomware criminals," White House principal deputy press secretary Karine Jean-Pierre said Tuesday. USDA has reached out to other U.S. meatpackers to alert them of the situation and Jean-Pierre said the Biden administration is seeking to "determine what we can do to mitigate any impacts as they may become necessary." JBS has reduced shifts or shut plants in the U.S. in Greeley, Colorado, Cactus, Texas and Ottumwa, Iowa, as a result of the cyberattack. A statement released by the company indicated it could "take time" to resolve the situation and there could be sales delays as a result. Plants in Minnesota, Pennsylvania and Nebraska were also affected. "The company took immediate action, suspending all affected systems, notifying authorities and activating the company's global network of IT professionals and third-party experts to resolve the situation," the statement said. "The company's backup servers were not affected, and it is actively working with an Incident Response firm to restore its systems as soon as possible." Given the supply disruptions that emerged along the U.S. East Coast after the Colonial Pipeline cyberattack, there are rising concerns that meat supplies could be interrupted due to the situation. And, if slaughter plants are dark for any extended period, it will back live animals up in the system and reignite supply disruptions that emerged during the COVID-19 pandemic. Already, meatpacking plants have been dealing with labor shortages as worker absenteeism has been running higher than normal. So, the longer any cyberattack-linked shutdowns last, the potential for supply interruptions rises. It potentially has already impacted some daily USDA livestock reports, including the midday updates on wholesale boxed beef and pork reports. USDA said the reports were delayed due to "packer submission issues." This also raises another potential issue as more and more automation has been deployed in meatpacking facilities. Those systems are computer driven, and if computer systems are down, that could also play a role. And that raises yet another issue for things in the future if the industry continues to shift toward more automation and less human involvement in the processing of pork, beef and poultry. But this situation has revealed once again that computer networks remain a vulnerable point across several areas of the U.S. economy. These attacks will continue to keep the issue in focus, but it is not clear how fast government can respond to be able to do much more than retroactively get involved in the situation. As lawmakers continue their focus on consolidation in the U.S. meatpacking industry, this adds one more area of focus to the calls by lawmakers like Sen. Chuck Grassley, R., Iowa, and others for congressional hearings on the matter. JBS is the world's largest meatpacker and it controls around 25% of all U.S. beef capacity and roughly 20% of its hog slaughter capacity. Plus, they are also a major poultry market player with the Pilgrim's Pride business. And some retail deliveries of product there have already been reported. So, we will see. These two cyberattacks have continued to signal that bad players in the world are still at it and by tapping into two key areas of the U.S. economy -- food and energy -- it creates a situation that needs to be watched closely, Washington Insider believes.

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