Wyke Farms' farmer suppliers will be able to fix their milk price for the next three years from January 2020 as part of a deal with Lidl.
The cheese producer, based in Somerset, agreed a long-term supply deal with the retailer last year.
Now a new deal has been secured which gives the option to Wyke's 130 farmer suppliers to fix between 10% and 50% of their volumes at 28p per litre from 1 January.
The dairy firm's managing director, Rich Clothier, told The Grocer that the deal would soothe volatility in what could be an 'uncertain next three years'.
He told the website: “We’re living in a more volatile world, with tit-for-tat trade disputes and ongoing uncertainty over Brexit, currency volatility and future trade deals.
“So we’ve been working with our customers to try and offer farmers a bit of long-term security.
“28 pence per litre is a fair price, and allows farmers to plan for the future of their business and reinvest.”
It follows a similar move by dairy processor Muller, who announced a long-term partnership with Lidl last year.
At the time, Muller said locking a portion of farmers' milk supply at a fixed price would 'significantly lower' exposure to milk price volatility.