Biojilels are believed to be reducing GHG emissions, contributing 10 energy security for foss ilrnfile l imporling counlries. generaling new income opportunilies in rural areas, and improvingrnenergy access for Ihe poor, wilh posilive implicalions for lhe environmenl and poverlyrnreduclion. However lhere are olher negalive consequences lhal queslion Ihe viabililY ofrnproducing hiofi,lels. which includes conversion of land and olher produclive resources from foodrn10 bioJuels lhal could reduce food availability and increase food prices, and contribule 10rndeplelion ofnalural resources when done in a non-sustainable manner in order to assess the challenges and opportunities of developing biodiesel in Ethiopia, farmersrnwho are working wilh FloraEco Power Company by producing caSlor in Eastern Hararge werernIiIken as a case study These farmers receive seeds, ferlilizers and peslicides ji'om Ihe companyrnand grow castor on their ollin land Finally Ihey sell Ihe harvested seeds to this company at arnfixed price set atlhe conlract signed behveen Ihem. The melhodology used was both qualilative and quantitative. Babille woreda was selected fromrnIhe three wuredas Ihal Ihe cumpany is wurking un due 10 ils road accessibililY and roadrnavailability. The sludy employed hvo-stage sampling procedure where al the first stage twornkebeles were selected randomly from Babille woreda and at the second slage 90 farmers werernselecled by systemalic random sampling. Parmers have benefited from this project in the case that new jobs have been createdfor them,rnwhich has brought addilional source of income. in addilion job opporlunities were available forrnnun-producers and agronomists in Ihe woreda. increase in price oJfood crops and decrease inrnfoud supply has occurred in Ihe area due 10 the new practice of caSlor produclion 10 a certainrndegree in addition to shortage o/rainfall. Farmers have allocated portion of their land 10 castorrnproduclion but since they were able 10 inlercrop caslor wilh olher food crops il has notrncompromised olher food produclion. Farmers use /erlilizers and peslicides monilored byrnagronomists who work with them which will not affect the environmenl.rnHOll'ever projects like this need proper moniloring 10 ensure sustainable development and tornmake small farmers higher benejiciaries.