This paper assesses the technical efficiency of paddy production in one of the major irrigation schemes in Sri Lanka with special emphasis on the usage of agrochemical inputs and determinants of technical efficiency. The presence of technical inefficiency and its causality is investigated using a stochastic production frontier model. Data for the estimation was gathered from a farm household survey covering 225 households across five administrative units from 3 irrigation blocks for the cultivation season 2003/2004. The results of the production function show negative relationships between yield and the cost of pesticides indicating an over use of pesticides. The average technical efficiency was estimated to be 0.37. Among the determinants of inefficiency estimates considered, the importance of credit and extension services on improving efficiency of farmer stand out while the farmers come from neighbouring villages appear efficient than the farmers settled in the villages.