The hike was approved by the States' Trading Supervisory Board and will come in on 25 March.
It follows a negotiated settlement between the Dairy and the Guernsey Farmers’ Association.
Guernsey Dairy general manager Andrew Tabel said: 'I am pleased that we have been able to reach settlement with the Guernsey Farmers’ Association on the 2018 producer price for milk. While this is likely to see an increase in the retail price of milk the agreement has other aspects to it that will further improve the analysis on which price changes are determined in the future with an emphasis on efficiency across the industry.'
The increase takes into consideration the annual reduction in the payment dairy farmers receive from the States for meeting environmental protection and welfare standards, through farm management agreements, as well as increasing farm costs.
The annual Dairy Farm Management Payment was £2.085 million in 2014, when the States approved its reduction by £200,000 a year to £1.085 million by 2019.
Of the 4.75p, farmers will receive 4.066p per litre.
The retail price of milk is no longer fixed by the States.
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