Jersey Dairy has put up the price of its milk by 8p a litre saying the increase is to save the industry amid rising costs.
Fuel, feed, fertiliser and wages have all gone up, said the dairy.
It means the price of retail milk in Jersey could go up if businesses decide to pass the price rise on to shoppers.
Jersey Dairy, which gets its milk from 13 farms on the island, said farmers had “not seen inflationary cost pressures of such a magnitude for many years, if ever”.
“The level of dairy farm cost increases, particularly fuel, purchased feed, fertiliser and wages are hitting farms hard,” it said.
The wholesale price is protected by customer confidentiality but the price of a litre of milk on the island is between £1.24 and £1.29.
Eamon Fenlon, managing director of Jersey Dairy, said “all of the income raised from this price increase will be passed back to our farmers”, but smaller farms would “continue to run at a loss”.
Jersey Dairy said it had also seen “significant increases” in packaging, ingredients and operating costs.
Dairy farmer Andrew Le Gallais, chairman of the Jersey Milk Marketing Board, said it was “essential” to have the increases now “if we want to have a sustainable commercial future”.