This study analysed the economics of small holder organic farmers in Muleba district. Specifically the study was conducted to identify the costs associated with organic and conventional coffee production, to assess profitability of the two farming system and to determine the effect of premium price in compensation of yield in organic coffee. The study also addressed the coffee organic standard demanded by importers. Multistage, purposive and simple random sampling procedures were employed for the selection of 100 respondents among which 50 farmers were organic coffee producers and 50 farmers were conventional coffee producers. The results showed that there was no statistically significant difference in costs associated with production of organic coffee and conventional coffee, especially as it was observed in labour costs and fixed costs. However there was statistically significant difference in average variable costs of the two farming system which was attributed by high marketing costs for organic coffee of about 58% higher than that of conventional coffee. Farm enterprise budget indicated that profit obtained from hulled conventional coffee exceeded those obtained from hulled organic coffee. Organic conversion in Muleba district was associated with increases rather than reductions in yield which relates to the low input characteristics of conventional farming in the district. With the premium price of 1 800 Tsh/kg offered to organic farmers and increase in yield, organic farmers were expected to be profitable, but due to high total variable costs observed organic farmers obtained less profit. From these findings it is recommended that deliberate efforts should be made to assist farmers to access training and extension services in order for them to correctly appraise their investments. If this is done and they are enabled to access credits and farm implements loans it will help them to realise higher net returns.Belgian Technical Cooperation (BTC)