The U.S. Department of Agriculture's Agricultural Marketing Service (AMS) has issued an interim final rule to amend regulations governing the Clingstone Peach Diversion Program. Effective August 3, 2026, this voluntary program provides payments to clingstone peach growers who remove trees, aiming to reduce overall production capacity. The initiative directly addresses the severe economic pressures confronting California's clingstone peach industry, which has been grappling with systemic oversupply and a dramatic decline in market demand for its primary product: canned peaches. Public comments on this interim rule are invited until September 29, 2026.
This federal action is a direct response to a request from the California Canning Peach Association (CCPA), representing approximately 85 percent of California's clingstone peach growers. It seeks to reestablish the purchasing power of these growers by bringing the domestic supply of clingstone peaches into better alignment with market realities, thereby mitigating the ongoing economic effects of chronic oversupply.
A Struggling Industry Landscape
The American clingstone peach industry has faced significant headwinds for decades. Clingstone peaches, characterized by flesh that "clings" to the pit, are almost exclusively processed into canned goods. Unlike freestone peaches, which dominate the fresh fruit market, clingstones rely heavily on a canning sector that has shrunk considerably.
Since the 1990s, domestic canned peach production has seen a steady decline. The U.S. has transitioned from being a net exporter to a net importer of canned peaches. This shift is attributable to a confluence of factors:
-
Increased Imports: Foreign competitors, particularly China and Greece, have become major exporters to the U.S. Greece has averaged about 53,000 tons of canned peach imports per year, with China close behind at 50,000 tons over the last three years. Other significant exporters include Thailand, Chile, Spain, and South Africa.
-
High Domestic Costs: U.S. growers contend with high domestic labor costs, which constitute more than two-thirds of direct production expenses, alongside rising costs for energy, chemicals, fertilizer, and equipment. Producer prices have not kept pace with these escalating expenditures.
-
Global Market Dynamics: Subsidized over-production in competing countries, unfavorable exchange rates, and what the industry describes as unfair trade practices further complicate the economic landscape for domestic growers.
These factors have led to a significant consolidation of the domestic canning industry. In the 1980s, California boasted 11 peach processors. By 2000, Tri-Valley Growers, then the largest processor, declared bankruptcy and closed its eight canning facilities. Further consolidation occurred with Del Monte Foods closing its Kingsburg plant in 2012 and Seneca Foods closing its Modesto plant in 2018. The crisis deepened profoundly on July 1, 2025, when Del Monte Foods declared bankruptcy and announced the closure of its sole remaining California cannery. This leaves only a single entity, Pacific Coast Producers (PCP), operating two processing facilities in the entire state.
California at the Core of the Crisis
California is the epicenter of U.S. clingstone peach production, accounting for 96 percent of the nation's processed clingstone peaches. National Agricultural Statistics Service (NASS) data indicates that in 2024, California produced approximately 75 percent of all peaches grown in the U.S., encompassing both clingstone and freestone varieties.
The effects of industry decline are clearly visible in acreage data. Bearing acres of clingstone peaches in California fell from an estimated 19,900 acres in 2014 to 13,300 acres in 2025. Paradoxically, driven by 20-year contracts offered by Del Monte Foods before its bankruptcy, growers planted more than 4,300 new acres of clingstone peach trees between 2023 and 2025. The CCPA estimates that without extraordinary intervention, bearing acres could rebound to about 15,500 by 2028. The recent closure of the last Del Monte Foods plant has exacerbated this situation, leaving over 5,600 acres of peaches without a processor contract and no viable alternative market. Once planted, peach trees take three years to bear commercial fruit, making it difficult for growers to quickly adjust to changing market conditions.
The Program's Mechanics and Authority
The Clingstone Peach Diversion Program operates under the authority of clause (3) of section 32 of the Agricultural Adjustment Act Amendment of 1935 (7 U.S.C. 612c). This section empowers the USDA to reestablish farmers' purchasing power by making payments related to the normal production of agricultural commodities for domestic consumption. The program specifically targets the removal of clingstone peach trees, thereby incentivizing growers to voluntarily reduce excess production capacity.
The parameters of the program are designed to ensure that diversion is not merely part of a normal orchard rejuvenation cycle. The CCPA has requested $9 million in federal funds, including administrative costs, to facilitate this tree removal program. This funding aims to provide critical relief to growers harmed by the contraction of the domestic peach canning industry and to help the industry achieve a more balanced supply-demand situation in both the short and long term.
Industry Attempts at Self-Correction
The California clingstone peach industry has not been passive in the face of these challenges. In 2005, the industry sponsored a diversion program that led to the removal of trees from approximately 2,000 acres. The CCPA has also initiated and funded various self-help efforts, including research to reduce production costs, export incentive programs to boost peach exports, and encouraging growers to limit new plantings.
Despite these concerted efforts, the systemic imbalance between supply and demand has persisted and, with the recent processing plant closures, has reached a critical point. The scale of the current market disruption underscores the need for federal intervention to supplement industry initiatives.
Regulatory Context
The USDA determined this interim final rule to be non-significant, meaning it was not subject to review by the Office of Management and Budget under Executive Order 12866, as its annual economic effect is projected to be below the $100 million threshold. Additionally, this action is exempt from the requirements of Executive Order 14192, "Unleashing Prosperity Through Deregulation," because it amends an existing regulation and participation is voluntary, aligning with the order's intent. The AMS has also assessed the rule under Executive Order 13175, "Consultation and Coordination with Indian Tribal Governments," finding it unlikely to have substantial direct effects on Indian Tribes. Finally, the rule has been reviewed under Executive Order 12988, "Civil Justice Reform," with no retroactive effect intended.
