Coffee is one of the most important export commodities in Buhigwe and Kigoma districts. The study estimates the Technical Efficiency (TE) and inefficiency effects. It uses gross margin to determine profitability whereas descriptive statistics to assess contribution of coffee to cash income and challenges facing farmers. The results show that the mean TE index is 68% and number of coffee trees and farming experience being the key factors affecting TE. Moreover, the mean gross margin was TZS 730/tree and contributes about 39% of cash income. Challenges: input prices, taxes and other deductions, shortage of extension services, unreliable markets and low coffee price, low quality of coffee, transportation and delayed payment delay. The present study farmers are technically inefficient and there is a 32% scope for increasing TE. Number of trees, experience and education level influence TE and coffee production is profitable to reduce income poverty. It is recommended that expansion and engaging youth are keys to improve TE. Prices, taxes, extension services, transport and delayed payment must be reviewed for improvement.