It’s not free to transport and distribute the product though. If the surplus has driven down price, the supplier may also be facing a lack of revenue that means

It’s not free to transport and distribute the product though. If the surplus has driven down price, the supplier may also be facing a lack of revenue that means any extra cost on transport is too much to bear, even if they really wish they could donate the discardable surplus. Additionally they may be able to count the discarded product in a business loss category that yields a better tax write-off or qualifies them for assistance in a way that straight donation doesn’t. To me your example feels like a Chesterton’s Fence scenario where government involvement is responsible for disincentivizing the common sense option of donating a surplus.