(Host) The Vermont Milk Company launched a year and a half ago with great fanfare and a promise to put more money in farmers' pockets.

But near-record prices have made it difficult for the company to pay farmers for the milk it needs to make ice cream, cheese and yogurt.

As VPR's Ross Sneyd reports, the company hopes a new investor and a new distributor are going to help put the operation back on its feet.

(Sneyd) Not that long ago, farmers were getting paid in the neighborhood of $11 for every hundred pounds of milk they produced.

The new Vermont Milk Company said it would give them $15 per hundred pounds.

But then the milk market turned around - and prices more than doubled. Vermont Milk President Brian LaCoss says the company can't afford to pay $24 per hundredweight, at least not under its original business plan.

(LaCoss) "We've just got to do things differently than we were doing before because we were losing money, actually. We weren't running very efficient, I guess you'd say.''

(Sneyd) Add to that skyrocketing fuel costs and challenges with plant equipment, and Vermont Milk found itself in a tight spot.

Payments to the four farms that ship their milk to Vermont Milk are 60 days or more past due, although LaCoss says the farmers will be paid by the end of the week. Two other farms that were shipping to the company are sending their milk to the St. Albans Co-Op for now.

Vermont Milk lost its largest customer because of the rising milk prices. So, only about half of the original dozen employees are still on the payroll. LaCoss says it's been a trying time.

(LaCoss) "There's been a lot of unexpected things going on that we didn't plan on. A little rougher business than you'd think it'd be, I guess, the milk business. I'm a farmer. I thought they were the ones making all the money. But you get doing it yourself and you see where it costs a lot of packaging and all that stuff. It runs into a lot of money.''

(Sneyd) Now, the company whose founders hoped they could show a new way for farmers to control their own destiny, is regrouping.

A new investor who doesn't want to be publicly identified has pumped $200,000 into the company.

A new distributor - Capitol Candy - will begin hauling Vermont Milk's cheese, ice cream and yogurt to about 2,000 stores in April. And the company is looking for a manager for its Hardwick plant to replace one who was hurt.

Gubernatorial candidate Anthony Pollina is one of the company's founders. He acknowledges it's been a tough year for Vermont Milk.

(Pollina) "I think what it's a reflection of is a very tumultuous economy that we are all doing our best to survive in. I do think that it's a dose of real life experience that I actually think is for me, an important part of who I am.''

(Sneyd) Pollina has stepped off the company's board to make time for his run for governor, but he's still committed to its success.

Pollina says he's confident that changes have begun and the company's fortunes will turn around - and the farmers it was designed to protect will prosper.

For VPR News, I'm Ross Sneyd.

AP Photo/Alden Pellet: Vermont Milk Company at its 2006 launch.