Wolkayet sugar development project is one of the sugar projects currently under construction in Ethiopia. The project is expected to produce sugar for export and local consumption as well as ethanol for energy purpose. In order to fill the gap in demand and supply for sugar and ethanol, the project has planned to increase production by participating small-holder farmers surrounding the project in cane production and supply through contract farming. Therefore, a study was carried out from June 2015 to May 2016, to assess the perception and willingness of small-holder farmers surrounding the project in outgrowing scheme of sugarcane production through contract farming. Primary information was obtained from household heads of 250 small-holder farmers using a pre-tested questionnaire. Three focus group discussions were also conducted. Descriptive statistics, chi-square and student t-test were used to describe and analyze the data using SPSS softwareversion 18. Majority (82.4%) of the sample household heads were men with average age of 46 years and family size of 5 persons. About 92% of the farmers were aware and willing to participate as sugarcane out-growers, although there was a high level of variation in their levels of awareness which ranged from less knowledge level to basic and enough knowledge level. Accordingly, 76.5% of willing farmers were expecting credit, technology and management skill transfers and guaranteed pricing structures from the scheme. They also preferred contracts in which the contracting firm supplies and manages all the inputs on the farm while the farmer provides only land and labor. Therefore, the findings of the study could potentially be used as an input for the project’s plans in engaging small-holder farmers in out-grower scheme of sugarcane production.