An application to give Jersey butter protected status has been rejected by Defra, the UK department responsible for food.
Jersey Dairy wanted the butter to be given protected designation of origin status in line with products such as Parma Ham, Champagne and Jersey Royals.
Jersey's dairy industry has just over 20 farmers with less than 3% of total EU Jersey cow numbers.
Roger Trewhella, chairman of the Jersey and Guernsey forum, said: "In countering the application, UK Jersey breeders and processors have had the support of breeders and organisations from across the world, including the World Jersey Cattle Bureau, itself domiciled on the Island.
"We trust that the Jersey [milk marketing board], and those supporting them, will reflect on the damage any PDO restrictions would cause to the Jersey breed.
"There are other ways of enhancing the image and reputation of dairy products from Jersey cattle, that would fuel the growth of the breed in Europe and worldwide."
There is now a 14-day period where Jersey dairy can review the decision.