The rise, which will take the co-operative's standard price up to 21.65ppl, will apply from 1 February.
The move will come as a relief to First Milk farmers, who have suffered steep cuts over the past year.
The higher price was the result of recent initiatives to reduce costs and improve profit streams, said chairman Bill Mustoe. "This move is a step in the right direction and we will make further steps as soon as we can," he added.
In December, Mustoe said the company was "in recovery pattern".