This chapter describes how sugarcane contract farming in Tanzania influences the performance of smallholders. The issue of upgrading smallholders’ production processes has increased in importance following what seems to have been the global adoption of privatisation and market liberalisation policies, which have created global competition among producers of primary commodities. Harvesting poor-quality cane and assigning it a low rendement actually offends against the harvesting protocol, which requires that sugarcane should be tested in the laboratory to confirm both crop-maturity and crop-quality before burning and cutting are carried out. The chapter investigates the extent to which the existing contractual arrangements in the sugar sector in Tanzania facilitate or obstruct the upgrading of out-growers’ production and points to the policy measures that are needed to increase production in this sub-sector. A contract is an important institution in which production, distribution and marketing arrangements can be coordinated between the actors in a value chain.