By Bob Ferguson, President, Strategic Consulting Inc.

In November 2022, the U.S. Food and Drug Administration (FDA) published its Final Food Traceability Rule, Requirements for Additional Traceability Records for Certain Foods,¹ as mandated by Congress under FSMA Section 204.

As stated in the rulemaking announcement released by FDA, the Traceability Rule requires companies that manufacture, process, pack, or hold foods listed on the Food Traceability List (FTL) to maintain detailed records on their supply chain and suppliers, including “Key Data Elements” (KDEs) about how those supplies are handled and processed. The Traceability Rule regulates processors of foods on the FTL, which include fresh-cut fruits and vegetables, shell eggs, nut butters, ready-to-eat deli salads, cheeses, and seafood products. The Traceability Rule applies to foods on the FTL, but a further stated aim of the rule is to encourage the voluntary adoption of these tracing records for all food products.

It is easy to see that the Traceability Rule will have a wide-reaching impact on those food companies that produce foods listed on the FTL. However, the Rule will also have a significant impact on many other companies, regardless of whether they produce foods on the FTL, due to supply chain conformity or the imposition of commercial requirements from their customers.

For this issue’s column, we wanted to find out more about food processors’ thoughts on the Food Traceability Rule, the impact it will have on their businesses, and what they are doing to prepare for current expectations and for eventual full compliance with the Traceability Rule by the three-year deadline.

To find out the answers to these questions, we conducted a survey and interviews with approximately 100 companies within the U.S., Canada, and 13 other countries across eight major processing categories. Of the companies that were part of our investigation, roughly two thirds—73 percent in North America and 67 percent international—said that they are FDA-regulated facilities (Figure 1). Of those in North America, 88 percent said they are aware of the changes proposed by the Rule (Figure 2). We found a lower level of awareness among international companies, with fewer than 50 percent saying they are familiar with the requirements, at the time of the survey.

Roughly one third of all facilities (Figure 3) said they produce products on the FTL (although this may be underreported, as about the same percentage said they did not know), and 57 percent said they thought the Traceability Rule would eventually apply to other foods not listed on the FTL.

We also wanted to find out processors’ top concerns about the Traceability Rule and the responsibilities it will impose for compliance (Figure 4). Of those companies indicating that they are familiar with the rule, their top concerns are around application and enforcement. The comments in this category mainly concerned which foods fall under the Traceability Rule and how FDA will approach enforcement for products that appear to be covered under the FTL but are not precisely defined in the text of the Rule.

As stated earlier, the Traceability Rule covers a number of high-risk foods listed on the FTL. These foods can be ingredients or final products, and can exist in the supply and processing chain in a number of forms. Many survey respondents questioned which foods are specifically addressed by the Rule and what happens when a food or ingredient is potentially covered in one form but may be changed during processing to a form that is potentially not covered. Are these foods still “high-risk,” according to the spirit of the Rule, in the way that these processors are using them? How will FDA define these products when they are used in another way, other than the exact form as described in the Rule?

One processor commented, “We are unsure when the foods are sufficiently changed to no longer match what is described on the FTL and at what point are foods not considered ‘fresh.’” Another added color to the topic by mentioning, “In our processes, we often use both whole and diced tomatoes and sometimes switch between both in a single production batch. The Rule doesn’t take into account that during the manufacturing process, the whole tomatoes break down and become indistinguishable from diced tomatoes, essentially making the ingredient description irrelevant.”

Another processor questioned the applicability of the Traceability Rule to its specific operation. The Rule defines applicability to include “…companies that manufacture, process, pack, or hold foods listed on the FTL…” This respondent said, “We are a nonprofit food bank distribution center. Does this Rule apply to us?” Another asked, “We are a distribution center only, and we do not change or process the food while in our possession. How does this Rule apply to us?”

The Rule also makes provisions for facilities to apply for an exemption. Several companies, especially distributors in a similar situation to the one referenced above, asked, “What will be the process to prove and maintain an exemption if one is allowed?” These types of questions about the applicability of the Traceability Rule run hand-in-hand with those directly related to enforcement in terms of who is required to do what, the type and intensity of enforcement to be expected, and how companies should prepare before the 2026 compliance dates.

Another theme that emerged from the enforcement questions was asking for help from FDA. Companies are eager for help in getting suppliers to understand and comply with the requirements of the Rule so that processors, especially smaller ones, are not put in the position of being responsible for educating several layers of their supply chain in compliance requirements of the Rule, or face penalties. If FDA implements strict levels of enforcement for suppliers and producers of end products, then end-product producers can be more confident that getting the data they need from their supply chain will be easier and the responsibility for education, awareness, and enforcement of the Rule will not fall on their shoulders. As such, many companies are looking for a high degree of outreach and education from FDA for everyone in the supply chain, so that all are aware of the Traceability Rule and understand its requirements.

The second most-cited concern has to do with compliance requirements. This series of comments can be simplified to, “What, specifically, needs to be done in my situation, and how do we get it done?” Many mentioned that without further clarity of all the steps required, it will be difficult to perform a gap analysis between current practices and Traceability Rule compliance. One processor wants to know, “Are our current practices not sufficient enough to match some of the KDEs being maintained?” Another asked, “What requirements for our suppliers are different from the requirements for our third-party auditors?”

The main topics within processors’ remaining major concerns can be characterized as elements of the execution of their eventual plan, concerns about the complexity of the programs and recordkeeping needed, and important considerations on additional staffing and costs required to comply with the Traceability Rule.

Only 5 percent of processors said they had “no concerns” about the Rule.

As anxiety-producing as these questions and concerns may sound, 87 percent of companies said that a three-year compliance timeframe was reasonable (Figure 5), with only 11 percent indicating “maybe or not sure” on the timeframe. Of the 87 percent who agreed, many said that they believed they had many of the necessary pieces already in place. One vegetable processor mentioned, “Three years is reasonable… most growers have already implemented the Rule.” An infant formula producer said, “Yes, I believe we are already compliant; if anything, it will require minor changes.”

Others seemed to be comfortable with the three-year timeline, but added caveats to their answers. “It depends on the technology that is needed to assist in this process,” said a quality assurance/control manager at a ready-to-eat meal producer, while a quality assurance/control manager at a dietary supplement manufacturer opined, “Three years is typically enough time to update a procedure.”

A food safety specialist at a fruit and vegetable processor was less convinced that the three-year compliance deadline was reasonable, saying that FDA will have a big role to play in the achievement of this deadline. “I’m not sure,” he said. “The FDA has not been clear about what is included in the final rule. They need to ‘educate before they regulate.’ FDA should hold educational sessions that clearly lay out the expectations of the law.”

Many of the comments and questions we received around the Traceability Rule were largely along the lines of, “Exactly what does this mean for us, and what will we have to do to comply?” Due to the uncertainty of what exactly is required, we also heard many comments related to what help might be available for processors to better understand the requirements, as well as FDA’s expectations and how we can hear those answers directly from the FDA. Processors want to know, “What is the impact on my company and my operations?”

Anticipating these comments, we also asked in our survey, “What do you wish the FDA understood about the impact of the Food Traceability Rule?” (Figure 6).

In the direct answer to our question, roughly one-third of respondents mentioned that they had specific food processing issues that would arise or be impacted by the Rule (Figure 6). Twenty-eight percent said the agency needed to consider the impact of the Rule on small businesses, and the remaining one-third had questions for FDA about the agency’s enforcement position, the training that may be needed, what resources and training assistance will be available from the agency, how the documentation requirements will work, and similar issues.

As to the first issue of specific food processing segments impacted, a food safety specialist at a fresh produce packager mentioned, “Most fresh produce products fall under the FTL, yet FDA does not have a solid grasp on how fresh produce is traced. In the proposed Rule, they seemed to be looking for case-level traceability, which is not doable.”

Another packaging company director of quality mentioned the complexities when dealing with multiple suppliers in a production process. He said, “Supply chain availability can sometimes require a manufacturer to pivot to a different supplier. Subtle differences, like diced tomatoes versus whole tomatoes, often prevent us from being able to do so because the ingredient deck of the finished product must specify the tomato’s form. Oftentimes, whole and diced are both used, and so both must be listed accordingly. It doesn’t consider that during the manufacturing process, the whole tomatoes break down and become indistinguishable from the diced, essentially making the ingredient description irrelevant, not to mention misleading. Allowing for ‘tomatoes’ to be listed without identifying the form would allow more flexibility and keep production lines moving. Downtime often comes when we are waiting on ingredients.”

Another quality assurance/quality control manager in a processed food facility echoed this complexity, saying, “Mixed production facilities such as ours use the same products across multiple streams in large quantities and need to have several suppliers for some production runs.”

The impact on small businesses is another area where processors wish FDA had a better understanding. Many people indicated this concern with a concise, “We wish they understood the impact this will have on small businesses; we are already struggling to comply with existing requirements.”

A key element of the Rule is for processors to have the ability to produce lot traceability records within 24 hours of a request for those records from FDA. Survey responses on readiness to comply with this element may be an indication of processors’ confidence in their current abilities, with 90 percent of survey respondents saying they have that capability now (Figure 7).

One dairy quality assurance/quality control manager added, “I imagine, for some companies, meeting the new requirements in three years could be difficult to achieve. Some small companies might have trouble [affording the] software that would make traceability more efficient…” Another comment, also from a dairy specialist, reinforced this idea: “It will be difficult for smaller companies to produce required documentation.”

So, what are companies using to gain this capability? We asked that too, of course!

Roughly one-third said they were using a commercial software program or an off-the-shelf module for their current enterprise resource planning (ERP) system (Figure 8). The next two responses saw 19 percent reporting that they were using spreadsheets, and 19 percent saying they had their records on paper. Together, these two categories of relatively “manual” recordkeeping accounted for the largest subset of systems reported being used.

One quality assurance/quality control manager of a dietary supplement contract manufacturer said that they would have no trouble tracking their raw materials and ingredients to their origin with their existing systems and programs. “We looked at existing systems and programs, and we found that each had gaps in what we needed. So, we worked with an independent design company, and we built our own system to meet our needs.” Once that system is ready, he indicated that tracking their products back to the source would be possible even within the 24-hour time target set by the Rule. “We even purchase certain ingredients from domestic brokers, but we get all of the tracking data from them on the origin of the products.” The main issue to overcome in their situation arises when they sell it to their customer—the brand owner. “The data on the distribution from our customer to the store and then to the end customer is not available to us,” the manager noted.

Another director of quality assurance at a contract manufacturer mentioned that all of their current records are still on paper. “We have looked at a number of the commercially available options, and we think one of those—especially those that are a ‘bolt-on’ to our current ERP system—may work well for us.” The issue he mentioned that is holding them up from fully implementing the new module is its cost. “Our issue is the not only the outright cost of the software and installation itself, but those costs combined with the continuing high costs we are facing in other areas—such as supply chain shortages and the high prices we are continuing to pay for logistics—makes it difficult to take on anything else. We keep waiting for our supply and logistics costs to return to normal, but it seems that once these costs went up during the supply chain crisis, there has been no incentive to reduce costs since, and that takes resources from other projects.”

Other companies that have already implemented traceability systems and new software programs commented about the lack of standardization of the software packages and the form of reports expected by FDA. Although the specific requirements of the Final Food Traceability Rule are not yet in force, several said that they have had issues with explaining what their systems collected in terms of supply chain data and how some inspectors had trouble accepting the format of the reports they produced. This lack of standardization may make communication and meeting expectations of the Rule more difficult during an inspection.

These are just a few examples of what companies are doing to prepare for compliance. This still leaves open the question of “Am I covered by the Rule, and do I have to comply?” Recall that about one-third were not sure if the Rule applied to them. Furthermore, more than one-half expected that the Rule will ultimately apply to foods other than those on the FTL, expanding the applicability of the Rule and potentially impacting more processors than expected.

As part of its outreach and education on the requirements of the Rule, FDA has released a decision-tree tool on its Food Traceability Website that allows companies to go through a series of questions to determine if they are entitled to an exemption to the Rule. Using what I learned in my interviews, I decided to try out this program. Now, certainly a caveat is in order. I took the information I was given in the interviews and applied that to the decision tool. I understand that what I learned in a 30-minute interview does not make me well versed with the particulars of any processor’s or distributor’s operations. In many cases, I had to estimate the correct input for the tool. These examples should be viewed as an illustration of the use of the decision tool and not as a definitive answer for anyone’s particular situation. Nonetheless, this exercise was an interesting experience.

In the case of the processor mentioned earlier that works with both whole and diced tomatoes, they reported that they used a validated thermal process to treat the incoming product. Assuming that their validated process meets the Rule’s requirement to comply with 21 CFR 112.2(b) to reduce the presence of microorganisms, and that process is used on all of their products, the FDA decision-tree tool seems to suggest that they should qualify for an exemption because of this kill step. This does not solve their labeling issue, but it may offer the possibility of a simpler option for compliance with the Rule.

Recall that we also discussed the case of a nonprofit food bank distributor. In describing their operation, they said, “We are a nonprofit food bank distribution center… and we do not change or process the food while in our possession.”

In running this case through the decision tool, it takes about five steps to arrive at the answer that this nonprofit distributor may not qualify for an exemption if they distribute any products on the FTL. Since they “take physical possession” of the food and it is for distribution and not “personal consumption,” the decision tool reports that they are not qualified for an exemption under “personal consumption, holding food for specific consumers.” On the other hand, the distributor may be eligible for an exemption if all of the foods that they distribute are “rarely consumed raw,” as defined in the Rule. This illustrates another of the complications of determining whether an entity qualifies for an exemption—there may be multiple paths to explore.

This exercise was used only as an illustration of how many questions may arise in determining which companies are subject to the Rule and much will depend on their specific situations. It does, however, illustrate that you will need to do your homework on your own, using all of the details of your specific operation to find out what you will be required to do to comply.

It is probably a good thing that we have several years.

Bob Ferguson is President of Strategic Consulting Inc. and can be reached at bobferguson9806@gmail.com or on Twitter at @SCI_Ferguson.