This study was conducted to assess the situation of agriculture and industry linkage and factors that affect the linkage in Ada 'a Woreda in particular reference to agro industries and rural farm households. The assessment used production, consumption, labour, technology, institutions and capital as a pillar to assess the situation. To generate appropriate data, sample survey, key informant interview and observation were employed. Using random sampling a total of 115 farm households were drawn based on their distance fi·om Bishoftu town. Similarly, purposive sampling method was employed to draw 6 food processing agro industries that are found in the area. A total of 15 key informants Fom government organizations, agro industries, and business firms (mainly traders) were also addressed. The data was collected through survey questionnaires, key informant interviews and observations. This study elicited important insights in the understanding of agriculture and industry linkages found in the study area. Accordingly, it was observed that there were long established linkages between agriculture and industlY. Most of the linkages are also recognized as indirect in the market process. It is also identified that low agricultural production due to small land holding and low application of modern agricultural inputs, distance of industrial establishments Fom farm households, indirect participation of agro industries in the local agricultural marketing system as well as dominance of wholesalers and brokers in the local agricultural marketing system are found as the main causes for low linkages of agriculture and industry in the area. Therefore, considering the existing situation of individual sectoral development and linkages of the sectors in the study area, increasing agricultural production and strengthening the agricultural marketing system are found paramount to enhance the local linkages of agriculture and industry .