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This study estimates the technical and allocative efficiency o f paddy farming in Sri
Lanka. Household-specific technical efficiencies were computed using cross-sectional
data collected from the household survey conducted in 2014 using a Stochastic Frontier
approach. The Cobb-Douglas functional form was adopted for the frontier production
function and the distributional assumption made for the inefficiency term was half
normal. The results o f this study show that the estimated mean technical efficiency of
the farmers is 78.32 percent, suggesting there is a scope o f 21.68 percent to increase
paddy productivity using present technology. The estimated Returns to Scale is 0.2806,
which implies that a proportional increase in all factors o f production leads to a less
than proportional increase in paddy productivity. Age, schooling, alcohol consumption,
agricultural training, farmers' attitudes, and the distance between the land and the
main watercourse are significant determinants o f technical efficiency. According to the
analysis o f allocative efficiency, there exists inefficiency in allocating resources, where
land and machinery resources are underutilised while labour is over utilised.
