It looks to me like some sort of boring insect/beetle has invaded your tree trunk. There seems to be little holes in your picture characteristic of borers. Although I cannot be certain. Take a look below this area and see if you can find anything that looks like sawdust. If so, that you can be pretty sure it's borers.

You need to take care of the infestation ASAP before the tree dies. Although I can't give you advice on what pesticides to use, I can personally tell you that when that happens to my trees, I take no chances and spray a mixture of sevin, permethrin, and malathion into the affected area as deeply as the liquid will go, drenching it multiple times per day for a week, and pray that the bugs haven't killed the tree yet.

I hate to see that. I lost an apple and peach tree last years due to it being girdled by disease. Take a knife and cut the damaged bark back to see if it has borer holes in it. If not it could be Cytospora canker. This is what got my trees. The one thing I do not see that a peach has with this disease is oozing amber jelly like goo. It may be to early though for it to start as it does it during the growth period. It will also ooze in areas on other parts of the tree as well. Oh and be sure to clean the knife with bleach or rubbing alcohol after using it on the tree to prevent spreading it. Unfortunately by the amount of damage it looks like it will be hard to save the tree.