The fresh fruit you see at the grocery store all "made the cut" what didn't make the cut became canned tomatos, apple concentrate, frozen hash browns and other more processed fruits. Nobody cares if a canned tomato looks lumpy.
The problem is that the opportunities to redirect produce that doesn't pass QC are basically nonexistent after a pretty early part of the supply chain. Supply chain logistics are a mostly solved problem. This won't be fixed until the benefit outweighs the cost. The cost will most likely have to decrease for that to happen. A complicating factor is that produce optimized for one track (e.g. fresh apples) might perform more poorly if repurposed after failing QC (e.g applesauce) so in some situations it makes more sense to just discard stuff that doesn't pass QC late in the supply chain than to redirect it into role it's not optimized for.
If it was more profitable to redirect stuff that doesn't pass QC then people would do it. Many restaurants already dispose of food waste separately and give it to pig farms. Pig farmer reduces feed cost and the restaurant reduces disposal costs.