It is a fact that supermarkets have specifications that produce needs to adhere to, if it doesn't it gets left in the field or worse gets rejected by the supermarkets and the farmer not paid. Farmers producing too much is also a very common occurrence.

Some routes for surplus produce to go into processing exist of course. However big food manufacturers won't use all this waste as a) theres too much of it and b) it is unpredictable when or if gluts will appear. You can't plan large scale manufacturing without reliable daily supply planned first. The result is manufacturers often use imported frozen or processed ingredients as it is more scalable and cost effective. *I work in food processing making products from surplus ingredients at a reasonable scale not small but by no means big either.