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Food Security: Concentration in processing sector can increase vulnerability

If Americans learned one thing from the Covid pandemic, it should have been that we need a more secure food system.

That is what North Dakota State University’s professor Kalidas Shetty, with the Global Institute of Food Security and International Agriculture, told TSLN.

A reported ransomware attack over Memorial Day weekend affecting JBS shut down all of their US beef plants and slowed pork and poultry processing in this country.



Shetty, a biochemist, said “The lesson from all of this is that the more centralized and more concentrated any part of the production system is, the more vulnerable it is to breakdowns which in turn pose challenges for consumers.

JBS plants in Australia did not operate at least on Monday, and at least one Canadian plant was held up for a couple of days according to Bloomberg. By Wednesday, Bloomberg reported that JBS was starting to reopen their plants around the world.



The FBI reported that REvil and Sodinokibi were to blame for the attack. According to BBC, REvil is a criminal network of ransomware hackers that came to light in 2019. It is believed most of their members are from Russia or countries that were formerly part of the Soviet Union.

REvil was linked to an attack on nearly two dozen local Texas governments in 2019 as well as an Apple supplier earlier this year, said BBC.

The hackers reportedly stole information and locked up JBS’s softward, demanding a ransom. The ransom demand was not publicized and JBS did not disclose whether or not they paid the ransom.

An oil pipeline hack affected fuel availability in the southwest last month. It was reported that the hackers were not the same as those who attacked JBS, and that the pipeline company did pay $4.4 million to the hackers who were also believed to be Russian-based.

The U.S. Department of Agriculture reported in an official news release that the JBS attack did indeed occur and that it had encouraged the other meat processors to increase capacity if possible to compensate for JBS’s lost time.

They said they also encouraged food, agriculture and retail organizations to ensure a stable, plentiful food supply.

The breach, the effects of which are not yet fully known, added fuel to the fire of those in the livestock industry who have repeatedly argued that the meat packing industry is too consolidated.

America’s food security has been called into question recently, and with greater concern during and after the pandemic which caused supply chain disruptions resulting in grocery store shelves being empty or void of certain products including beef at times.

Profit for all sectors of the production chain is important to maintaining food security. Photo by Liz Banman Munsterteiger

Food Security from a local perspective

Many cattle industry spokesmen said that the high level of concentration at the packing level (about 80 percent of beef packing facilities being controlled by four businesses, two of which are Brazilian-owned) puts American consumers at risk of continued food insecurity.

Cory Hart, a cattle feeder, rancher and farmer from rural Chaseley, North Dakota sells home-raised beef slaughtered in a local cooperative packing plant. He thinks his customers are concerned about the security of their food supply.

His beef sales increased dramatically during the Covid pandemic when consumers were unable to get beef in the local grocery store or discovered that beef was more expensive than before. Many urban customers contacted him for locally grown beef. For some of these individuals, buying beef in bulk was a new experience. Many of them did not have a large freezer prior to buying the beef.

Before Covid, Hart was usually selling around 30 head of cattle per year in the form of beef, without advertising – just keeping repeat customers supplied.

In the past 12 months, with increased demand during the pandemic, he sold at least 100 head of cattle (as processed beef) statewide.

This week after news of the JBS cyberhack broke, he sold over eight head of cattle in just three days due to consumers’ increased concern over another beef shortage and concern with beef prices already skyrocketing and reports that they may continue to increase. Hart has not changed is beef prices since before the pandemic.

Boxed beef has continued its rise this week and is now up to about $3.40 per pound with live cattle bids steady at about $1.91-$1.92 per pound dressed, said Hart.

Food Security from a global perspective

Shetty, a native of India, said that he looks at how humans across the globe can eat differently in order to improve their health, and positively impact the planet from both an environmental and economic perspective, which he realizes go hand in hand.

Feeding the world is both an ecological issue and a health issue, he said, and one of his big priorities is to help people understand that super-refined hyper processed carbohydrates are contributing to chronic health problems.

“From that, we start balancing how we grow our milk, our meat, whatever balance we need. We need to diversify,” he said.

Shetty said one major issue that needs addressed is what he calls the “farmers’ value issue.”

“The farmer is producing the product, but he is not controlling it. It is the processor controlling it. So where is the value to the farmer?”

The professor, who has a BS in Agricultural Science from India, a MS in Bacteriology and a PhD in Microbiology, both from the University of Idaho, believes small businesses are the backbone of America. “I’m a free market thinker and I love small business. A rancher is a small business. Any country democratically entrepreneurial is great. Being able to supply into the bigger network without anyone controlling us is great,” he said. “The small entrepreneurs are the backbone of this country. They are the ones creating jobs, who are the most resilient, they are the ones innovating and taking risks,” he said.

“I think what the pandemic taught us is that we should manage our own supply, decentralize,” he said.

Critical areas like human health, food supplies, and others must be protected by a nation’s government, he said. “We cannot be compromised. I call this ‘strategic economy.’ Yes, we need to globalize and work with the world and see where ethics come in. But we work with people who are ethical, and we don’t let people or businesses take us ‘for a ride.’ Ethics are important, so you can’t compromise me and I can’t compromise you. A country needs to control its own destiny.”

The nation’s food security has been compromised, which shouldn’t be a matter of Republican or Cemocrat, he said.

“There are basic things that transcend politics. My philosophy is that every human has a right to dignity, the right to self respect,” he said. “Every community has this right, and every country has this right. Strategic economy and resilience go hand in hand,” he said. And an industry is not resilient without a fair and ethical business practices in which every member in the production chain has the chance to make a profit, he said.

Ethical business practices must be a part of this scenario, he said.

“Every spoke in the wheel has to be working well. You can’t have ranchers fail. You can only allow greed that squeezes one entity for so long. At some point, who is going to produce all of the food needed? I feel that the law of nature is working against concentration. We don’t want this food system to collapse. If the rancher collapses, many things collapse.”

He is not talking about socialist policies, Shetty said, but government oversight that encourages fairness and profit potential for all involved.

“I think there has to be a policy directive regarding monopolies – free market policies. There can be fair play for fairer distribution of wealth,” he said.

“Free market is the best approach. Profit is not wrong but everyone has to have the right to a profit in the free market,” he said.

A diversified supply chain is better for this country, said Shetty. “Diversifying makes sense. It provides cheaper food and helps businesses be more successful and invest in themselves.”

South Dakota offers grants for meat processors

In a timely move, South Dakota’s Governor Noem announced Thursday, June, 3, 2021, a grant program that would make $5 million available to South Dakota meat processors.

The funding is made available through the state’s Coronavirus Relief Meat Processing Grant program, said the official news release.

“Our nation’s food supply is a national food security issue,” said Noem in a press conference announcing the grant program.

“When another country controls our food, that’s when they control us. I’ve always been passionate about being sure we have thriving farms and ranches,” she said.

“We’ve seen disruptions in the supply chain with what happened at JBS. Hackers came in and impacted over 20 percent of the nation’s capacity by going through the computer system,” she said.

Lieutenant Governor Larry Rhoden said the bottleneck at the packing facility has been a problem for years. “Retail prices go up, cattle prices go down,” he said.

“It’s not just about producers or processors, it’s about consumers, their choices and availability. Food security is national security.”

Noem said the grant program is intended to increase packing capacity which will hopefully improve stability of the packing industry for South Dakotans and to help give South Dakota cattle producers better opportunities to market beef within the state and across state lines within the Cooperative Interstate Shipment agreement.

According to USDA’s Food Safety Inspection Service,

The Cooperative Interstate Shipment (CIS) program promotes the expansion of business opportunities for state-inspected meat and poultry establishments. Under CIS, state-inspected plants can operate as federally-inspected facilities, under specific conditions, and ship their product in interstate commerce and internationally. Without CIS, a state-inspected plant is limited to sales within its own borders even if an adjoining state is just across the highway or river.

The CIS program is limited to plants located in the 27 states that have established a Meat and Poultry Inspection Program (MPI) and maintain “at least equal to” FSIS regulatory standards.

According to FSIS, currently participating states are: Indiana, Iowa, Maine, Missouri, North Dakota, Ohio, Vermont and Wisconsin.

South Dakota Cattlemen’s Association President Eric Jennings praised the announcement, saying Covid 19 exposed a “weak link” and that the grant program will address that by helping increase packing capacity.

Larry Stomprud with South Dakota Farm Bureau said the program was a win-win for everyone. “It’s a win for producers, processors and consumers. South Dakota raises the best beef in the world but we’ve experience trouble getting them to market,” he said.

The Executive Director of the South Dakota Stockgrowers Association, James Halverson said his organization appreciated the grant program. “Just last week 12 percent of the cattle were bought on the open cash market. That’s not very good for our industry. That’s hurting our producers. Business models like this will help combat them,” he said.

 


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