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During shmittah, some stores sell otzar beis din produce which is ok to eat. What is otzar beis din and why does it make the produce permissible to eat?

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The Otzar Beit Din is when the Beit Din pays the farmer to collect their produce for the community. The farmer is then a shaliach, and you are not buying the fruit. You're paying him for his effort. Then, when the consumer buys it, he is paying back the Beit Din, again, not buying the fruit. Otzar Beit Din, however, still has kedushat shvi'it, so it cannot be wasted or destroyed.

See http://www.star-k.org/kashrus/kk-medi-otzer.htm

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