Dairy farmers supplying Muller who meet the conditions for the Direct Premium 2020 will receive a milk price increase from November.
Dairy producers will see a milk price of 27.25p per litre from 1 November - a 1p per litre increase.
The 1ppl premium will be paid in a lump sum in January 2021, and would be worth £20,000 to a 2 million litre per annum producer.
According to the processor, the revised milk price reflects recent stability in returns from cream and butter markets.
But it warned there remained 'considerable uncertainties ahead' which may impact market returns - namely Covid-19 and Brexit.
Rob Hutchison, Chief Operating Officer at Muller Milk & Ingredients said: "We aim to ensure that Muller remains a reliable and progressive partner for the dairy farmers who choose to supply us.”
The Muller Direct Premium 2020 payment is based on involvement by farmers in four herd health initiatives.
These include ending the practice of euthanising healthy bull calves on farm by December 2020, the Muller Direct Farm Insight Programme, the Muller Direct Antibiotic Programme and the National Johne’s Management Plan.
The Direct Premium applies to Direct farmers who satisfy the Direct Premium 2020 Notice and is not available to the Aligned Milk Pool.