I think it's less an issue of underlying market demand and more an issue of corporate bullshit leading to Del Monte failing to either operate the processing plant itself or sell it to some other entity that would.

If the peach processing weren't basically a monopoly, the farmers would've been able to find somebody else to sell their peaches to.

Yes, this variety is selected for its physical properties, not taste. Good peaches turn to mush when canned; they are better fresh. These peaches are harder, but relatively tasteless, which is why they are usually canned in heavy syrup.

If they aren't going to be canned, there is no point in keeping them.