MSc. DissertationThis study intended to assess challenges facing supply of outgrowers sugarcane to Mtibwa factory in Morogoro, Tanzania using a sample of 210 respondents. The main objective was to investigate problems leading to low supply of cane from outgrowers. Specifically the study aimed to (i) Investigate factors affecting farm level productivity,(ii) Analyze sugarcane outgrowers technical efficiency, (iii) Determine profitability of sugarcane production among outgrowers and (iv) Examine constraints facing sugarcane outgrowers. Cobb-Douglas stochastic frontier with technical efficiency effect was used to estimate factors affecting sugarcane productivity, technical efficiency and factors affecting efficiency. Outgrowers profitability was estimated by Net Present Value (NPV) analysis. Stochastic production function estimates showed that; factor affecting sugarcane productivity were 0.02, 1.2e-3, and 0.78 for capital, labour and land respectively. Findings also showed that the mean technical efficiency was 53.75%. Furthermore; the results showed that the factors affecting efficiency levels positively were age, farming experience, non-farm activities, marital status and household size. Profitability analysis from calculated values of NPV was positive thus it can be concluded that the business was profitable. Major problems faced by outgrowers included late payments, low price, high service charges and lack of transparency in calculating rendement and sugarcane weight.