(Bloomberg) -- A Swiss company that’s the world’s largest maker of bulk chocolate expects acute cocoa shortages to persist into next season as farmers in West Africa lack the incentive to expand output.

Barry Callebaut AG, which supplies some of the biggest consumer chocolate brands, expects cocoa production to fall short of consumption by 500,000 metric tons in the season that started in October, according to Hugo van der Goes, the company’s vice president for cocoa in North America. Another deficit of 150,000 tons is expected the following season.

Cocoa prices have surged over the past year to trade at a record earlier this month as Ivory Coast and Ghana, which account for about 60% of global production, struggle with bad weather and disease that’s impacting already aging trees. And there’s little incentive to grow more, because the price growers received from the government was set at much lower levels.

“Farmers in Ivory Coast and Ghana don’t see the incentive today to grow more,” van der Goes said at the International Sweetener Colloquium. “For now we don’t see any recovery in the supply.”

Cocoa’s rally has been relentless, with prices surging to a record $6,648 a ton earlier this month. Futures have overtaken their 1977 high, surprising even the most season traders. Many now argue there could be more to price gains to come, with Citigroup Inc. saying cocoa could exceed $7,000 and even hit $10,000 a ton.

Ivory Coast and Ghana sell most of their crop in the year before the harvest starts. That means it will take some time before the West Africa nations can benefit from the higher futures prices and pass them on to growers. To make matters worse, new European Union regulations stating that crops can’t come from deforested areas will limit output expansion.

“In the past in Ivory Coast, with prices like this, cocoa would be planted on virgin land,” van der Goes said at the event in Florida. “There is no way for farmers today to expand his farms unless he cuts down his trees. Well, that’s a very difficult story to tell.”

High prices are yet to cause any “significant slowdown” in demand and “a lot more demand destruction” will be needed to cool prices, he said. Chocolate makers which usually have about 11 months of futures protection, only have about 7.7 months now, he said. That’s a sign that they still need to buy more.

“The supply shortfall is just way bigger than what we see on the demand destruction side,” he said.

(Updates with executive quotes from third paragraph.)

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