Prolonged JBS meat shutdown could hit China hardest

Beijing

A PROLONGED shutdown at global meat supplier JBS SA could hit China the hardest as the country is the world's biggest beef buyer and accounts for almost a third of the producer's export revenue.

China is also an important market for beef shipments from Australia, where a devastating cyberattack has halted JBS slaughter houses since the weekend, along with all its plants in the US and at least one in Canada. Beef prices in China are already near a record, and any lengthy supply disruption could push up prices even more and stoke food inflation fears.

JBS, the world's largest meat producer, said it's made "significant" progress to resolve the attack and will have the "vast majority" of its plants operational on Wednesday. It's still unclear which plants will come back, and there's a chance some places may face meat shortages and rising retail prices.

That's not a risk Beijing will take lightly. Food security has been at the forefront of China's political agenda, especially ahead of the 100th anniversary of the founding of the communist party this year.

Floods, epidemics and trade tensions have raised pressure on the government to safeguard food supply, with efforts ranging from increasing output to boosting imports. Still, prices of pork, the nation's staple, have dropped, which may offset some of these fears.

Sao Paulo-based JBS owns facilities in 20 countries. The company is the biggest meat and food processor in Australia and its Dinmore facility is the largest beef plant in the southern hemisphere. In the US, JBS plants account for almost a quarter of American beef supplies.

While Beijing has banned products from several Australian abattoirs amid rising bilateral political tensions, JBS remains the top supplier of beef to China. On a global basis, Asia is the destination for about half of JBS's exports, with China accounting for about 31 per cent, Japan for 11 per cent and South Korea around 8 per cent. BLOOMBERG