Farmer groups (FGs) approach is seen as a fundamental solution to income poverty and food insecurity. On the basis of a data set on “Contribution of FGs to household income”, this dissertation analyses the extent to which farmer groups alleviate both income poverty to small scale farmers who are rural poor in four villages in Iramba District. The overall objective of the study was to determine the contribution of FGs to household income. A cross-sectional design was adopted whereby purposive and simple random sampling methods were used to obtain 100 respondents, that is 50 from group members and another 50 from non-members. Both structured and unstructured questionnaire were used in data collection and checklist for collecting information from key informants. The collected data were statistically analyzed using Statistical Package for Social Sciences (SPSS) computer program version 12.0. Descriptive statistics such as frequencies, means and percentages were computed. T- test was applied to find out relationship between variables. The study findings show that crop and animal husbandry were most preferred farming activities by FGs in the study area amounting 51%. Moreover, T-test analysis revealed that group members’ income contribution to household was statistically significant as compared to incomes contributed from members without group at P<0.05. Shortage of capital and uncooperative members were often cited by farmers as critical constraints facing them. The study provides the following recommendations: Groups should be based on farmer needs, small (5-20 members), self-reliant and cohesive units, FGs should be working with agro-processors and large marketing agencies to create a value chain from production to marketing, and should be facilitated to have networks with other groups. Furthermore the study recommended developing rural financial system to ensure FGs members access to low interest credits