Ailing Fruit Cocktail Tree

General Fruit Growing
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I picked up a ‘fruit cocktail’ tree from Fast Growing Trees several years back. I failed to see the caveat about Zone 6 or higher (I’m zone 5)…so it hasn’t been a great producer overall. That being said, it hassurvived and grown quickly.

The last two years, however, the plums and peaches have died off. The only variety left–we believe–is an apricot (and none of us like apricots). I’m at the point where I think I will cut my losses and cut it down.

…but then I learned about bark grafting. Over the winter I thought I’d order some scionwood for stone fruits that can survive at -20º or lower. They have arrived and are in my fridge waiting for a warm April day as the buds are beginning to open.

At the same time, I’m seriously worried about the health of the tree overall. I have some weird sap seeping out of branches, mushrooms growing on the mangled trunk, and what appears to be an exposed sapwood or hardwood (see pictures). Not sure, but it feels like something is eating away at the tree itself.

My question to the backyard orchard community, What should I do? Do I cut my losses and plant a new tree (with the mindset of grafting other stone fruits as it grows) or try to save the years of growth by cutting the large branches and bark grafting?

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Fungi on trunk is not a good sign on fruit trees. All areas under fungus is already dead and the bark with fungus will eventually peel off leaving the wood exposed (just like your 1st picture). I think it’s likely some canker causing diseases or winter sun damage destroyed the cambium and then the fungus moved in. I think you’re right to cast doubt on the long term health of the tree.

Perhaps one drastic thing you could do once the tree wakes and is ready to graft is:
Completely chop off (and properly dispose of) the diseased top of the tree, leaving only the healthy wood perhaps 1 foot off the ground. You could then do a few rind grafts on the 1foot tall stump with your scions. There is a chance your tree will just die if it is not in a state of resilience.

Check for winter sun injury, which would be only on one side of the tree. If your trees are prone to this type of injury, any future growth needs to be protected from such.

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Thank you, @sockworth; that’s what I was thinking as well. I may just cut it down and start fresh with the Arctic Glo nectarine I have blooming in a pot. Thankfully whatever is affecting the fruit cocktail tree is not spreading to others.