Tobacco is consumed worldwide and has been cultivated in Africa since the end of the 16th century though commercial cultivation began around the 19th century. The expansion of tobacco farming has been encouraged and financed by major cigarette companies around the world especially in developing countries. In Kenya, tobacco is currently grown for commercial and non-commercial purposes in Nyanza, Western, Central and Eastern Provinces supported by BAT (K) and Mastermind K, which are the leading cigarette companies (Kibwage et al, 2009). While there are many advantages to tobacco farming such as salaries and wages for employees and farm workers, and government revenue through taxes; it may also have adverse effects. According to Effroymson and FitzGerald (2002), tobacco growing not only provides funds for basic existence but keeps the poor entrenched in a cycle of poverty. The objectives of this study was to identify socio-economic challenges faced by contracted smallholder tobacco farmers in Giaki, coping mechanisms employed by contracted tobacco farmers in dealing with tobacco farming challenges in Giaki and to establish contracted smallholder tobacco farmers who re willing to stop tobacco farming in Giaki. A total of 86 respondents were sampled from the study using snowball sampling. Structured interview schedules and focus group discussions were used to gather data. The main socio-economic challenges identified during processing and cultivation of the crop was tobacco pests and diseases, labour shortages and health problems. Among the problems faced during marketing of tobacco crop, the most mentioned problem was that the tobacco company charged exorbitant prices for farm inputs like seeds, fertilizers, chemicals and even firewood; delayed payments, low prices and poor tobacco leaf grading system. Tobacco farmers in this area engage in other off-farm activities to boost their tobacco cultivation earnings. Also, farmers have diversified their farming to enable them sustain food for the household. Most farmers would prefer to shift from tobacco farming and adapt other alternative crops as tobacco cultivation is both time and labour intensive. The study recommends that the contracting tobacco company should be encouraged to renegotiate the contract given to farmers so that farmers can purchase inputs for themselves. Also, farmers should be trained on better methods of processing and cultivation of tobacco crop to improve the grade of the harvested crop. As most farmers engaged in tobacco farming due to availability of loans and ready market, this study also recommends diversification for loan options for other businesses like small scale industries. More sociological research should be done on the extent to which Tobacco companies are willing to help smallholder tobacco farmers solve socio-economic challenges faced in Giaki. Impact of tobacco farming on livelihood of contracted tobacco farmers in comparison with nontobacco farmers in Giaki and the role played by the government in solving socio-economic challenges of small scale tobacco crop farmers in Giaki.

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