My grandparents owned a food processing business until the early 90s. One of their main businesses was slicing potatoes to be used in grocery store potato salad.
They had a room dedicated to removing eyes before running them through the peeler.
From the stories I've heard they'd use anything. Potatoes where half the bag is rotten mush, sure. Rotten potatoes where the sprouts have big enough spuds to process, use the sprouted spuds.
I think those were the extreme cases, since they're stories I've heard, but I doubt any similar facility isn't cutting out eyes and processing them today.
From experience, a lot of this stuff gets redirected to jail and prison kitchens where the labor is free or cheap. Then those guys get to spend their days cutting out eyes and sprouts and sorting the ones full of maggots out as best they can (they're not 100% effective). And then they get served to the denizens.
[the jail I was at would regularly receive entire 40ft semi trucks filled with wet bags of potatoes that were rotting and covered in flies]
They had a room dedicated to removing eyes before running them through the peeler.
From the stories I've heard they'd use anything. Potatoes where half the bag is rotten mush, sure. Rotten potatoes where the sprouts have big enough spuds to process, use the sprouted spuds.
I think those were the extreme cases, since they're stories I've heard, but I doubt any similar facility isn't cutting out eyes and processing them today.