[Animats]

That's probably from the washing and root removal.[1] Those machines have drums, rollers, or vibrating screens which remove unwanted bits of root.

Potato harvesters are simple. They drive a horizontal blade through the ground at root level, and bring up everything above the blade onto a conveyor with slots. The dirt falls through the slots back onto the ground, and the potatoes are carried upward. Here's an operation that's digging 450 acres a day. Look how fast the trucks fill up with potatoes. No amount of hand labor could compete with that.[2]

[1] https://www.youtube.com/watch?v=i7gydrEpzAs [2] https://www.youtube.com/watch?v=0KL7OrHkDaY

[Animats]

This is probably where the cuts come from.[1] That's a machine that separates potatoes from rocks and dirt clods by dry mechanical means. Notice the toothed wheels over which the potatoes pass. There are other machines which do the same job more gently by floating the potatoes in water, while the rocks sink, but this one doesn't need so much water.

If most of your product is headed for the peeler and french fry cutter, there's no advantage to keeping the potato skin intact.

[1] https://www.youtube.com/watch?v=Lo3rpXoAH7w