Ben Krause posted this to ferret-talk.

 ENV['LC_CTYPE'] = 'en_US.UTF-8'
 Ferret.locale = "en_US.UTF-8"

 see http://bugs.omdb.org/browser/trunk/config/environment.rb

 searching for utf-8 works great, i've indexed characters
 in german, english, asian languages, hebrew and other..