The UK's largest dairy has warned milk supplies could be under threat unless its farmers are paid more.
The managing director of Arla Foods - a co-operative which has one in four British farmers as a member - said costs are increasing at rates never seen before and that farmers can no longer cover their expenses.
Ash Amirahmadi added that farmers are producing less milk as a result.
"UK dairy farmers have been producing more for about the last seven to eight years, but it's now going the other way," Mr Amirahmadi told the BBC.
"In February, they produced 2% less and in March it's 4%.
"The most important thing now is that we put our arm around the farmers…and pay our farmers more to cover their costs to make sure the milk is flowing."
With cost increases of some 36%, he warned farmers are facing some hard decisions and that they need confidence to carry on producing.
And that means securing a higher price from Arla's customers - the supermarkets.
Arla believes increasing global demand for dairy is an opportunity for farmers in the UK. The prices paid to farmers abroad are now 15% higher than the prices paid to farmers here.
It's already trialling the export of fresh British milk for processing at its European sites which is then sold on international markets.