Abstract: The purpose of this study is to investigate sectorial transition dilemma of smallholder coffee farmers to light manufacturing industry. In Jimma Zone, Oromia region, Ethiopia. The vibrant question is, will coffee farmer remain in supplying coffee, go for alternative or change their occupation. Primary data was collected from three hundred ninety nine household heads using structured questioner. Based on this data the study examined smallholder coffee farmer’s dilemma, willingness, ability, preferences, and motive descriptively. And, determinants of transition to light manufacturing industry using binary logit model.