Dissertation (MA Development Studies)Despite the potential of cashew nut to generate income and improve the livelihood of small scale cashew nut farmers, farmers are still living in poor condition. This study is about the factors limiting contribution of cashew nut farming to improvement of livelihood of small scale farmers in Mtwara Rural District. Specifically the study analyze social economic characteristic of small scale cashew nuts farmers area, marketing system of cashew nut, assess the effectiveness of warehouse receipts system in ensuring better prices of cashew nuts and challenges facing small scale cashew nuts farmers in the study area. A sample of 95 head of household and 21 key informants were involved in study. Cross sectional survey design was used in which data was collected only once. Descriptive statistics were used to analyze data using statistical package for social sciences (SPSS) software. Data was descriptively analyzed for means and frequencies, cross tabulation were used to compare results between villages. Results indicate that on average majority of respondents were at 40s years old with more males than females. Results on marketing system revealed that about half (57.8%) of the farmers sell their products to the Primary cooperative. Only few sell their cashew nuts at the market place (3.2%) and outside the country (7.4%). The results indicate that only 24% of respondents appreciate roles of warehouse in promoting prices. Major challenges facing farmers are lack of access to credit, government taxes and lack of training. The study recommends that the government and other cashew nut stakeholders should ensure provision of credits to farmers at affordable interest rates, provision of Agriculture Extension Services, lowering price of agriculture inputs and remunerative price of cashew nut through appropriate indicative price.