When Andy Kennedy asked a room of produce professionals at the 2026 Global Floral and Produce Show in Orlando, Florida, on Wednesday how many felt comfortably entrenched in FSMA 204 — the FDA's Food Traceability Rule — only a few hands went up.

Kennedy is chief traceability officer at iFoodDS, a food supply chain traceability firm. The show of hands came two years after the FDA pushed the rule's compliance deadline from January 2026 to July 2028. Even with the extra runway, he said, most distribution operations are not ready, and the weakest link sits at the loading dock.

What do iFoodDS audits actually find?

"I do a lot of X-ray audits," Kennedy said. "We walk around distribution centers and look at case labels, look at the receiving process. And honestly, most of the labels out there are straight garbage."

His starter recommendation for produce distributors is deliberately narrow. Walk into the production facility, go to the Product Traceability Initiative (PTI) label print line and scan the labels. The PTI is the produce industry's voluntary labeling standard that encodes traceability data, including lot codes, into a case-level barcode.

The audit findings Kennedy described are mechanical, not conceptual:

• PTI labels where the barcode does not line up with the edge of the label, cutting part of it off
• Poorly maintained printers that render an entire barcode as one long smudge
• Re-packers leaving the old label on a box and adding a new one, forcing the receiver to guess which label governs
• Outbound Advanced Shipping Notices (ASN), the electronic manifest sent ahead of a shipment, whose lot codes do not match the physical pallet

"Now the receiver gets to choose his own adventure," Kennedy said of the double-label problem.

His prescription: put yourself in the customer's position and see whether you can decode your own outbound pallets. Then inspect the warehouse. Determine whether everything inbound and outbound could be scanned seamlessly today.

What does a bad label cost?

For distributors, unreadable labels are already converting into chargebacks — the fees retailers and receivers levy for non-compliant shipments. Carol McMillan, senior director of IT for Naturine Farms, said her company requires growers to fold labeling and scanning into their quality control inspections.

"I don't know if you're getting chargebacks for this, but if the PTI label isn't scannable, or if the ASN isn't received, you're most likely starting to see chargebacks for those," McMillan said.

Her sequencing advice for companies starting from zero: build the compliance framework first, onboard customers second, and refine the details later. She framed accuracy as a trajectory rather than a day-one deliverable.

"Is it going to be 100% accurate on day one? No, this is produce," McMillan said. "So we have to be realistic, but the framework is in place, and we're continuing toward that 100% accuracy on the delivery of the information. In the meantime, our backend — the information we can provide and trace back — is rock solid."

Where might the FDA bend?

Kennedy sits on the Partnership for Food Traceability, an industry group that meets quarterly with the Food and Drug Administration to press for flexibility in how the rule is applied. Two flexibility questions are live.

The FDA has already published one: companies may report their headquarters location as the Traceability Lot Code (TLC) source instead of the exact field location where product was packed out. The TLC is the identifier that ties a food item to its specific handling history.

A second flexibility is still under consideration. It involves cases picked from a pallet. Kennedy said warehouses do not scan case labels today, so the partnership has launched a pilot program to test a three-way matching system as an alternative compliance path.

For distributors, the near-term economics are straightforward: label quality drives chargeback exposure and receiving throughput today, regardless of the 2028 deadline. The pilot program's results, and any further FDA flexibility on case-level scanning, will shape how much warehouse infrastructure produce distributors must ultimately retrofit.