Answer: Growing vegetables under your peach tree will not harm either the tree or the veggies. However, most vegetables require exposure to full sunshine, so don't plant sun lovers such as peppers, tomatoes, cucumbers, corn, etc. You can plant leafy vegetables, though, under the shade of your peach tree.
There are many reasons for fruit trees dropping their fruit - I think the heavy rains your area experienced this spring had an effect on pollination, either by ruining the blossoms or by keeping flying insects from transferring pollen. I suspect your tree will produce fruit next year, right on schedule.
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