Both paddy seed and paddy grain production in Nepal is strongly affected by the farm specific factors such as the seed types, credit access to the farmers, technical support, educational level and age of household head. These variables have significant influence in the inefficiency of the seed production. Efficiency of the production is very crucial in determining the returns on the investment. The introduction of new technology has been used as a standard for distinguishing between a modern system and a traditional system and for improving the efficiency of the production system . However, in developing countries technology are barely successful in improving the production efficiency. This study was important for assessing the cost incurred in the various factors of production and how efficiently these factors were used to produce the desirable output. Furthermore, the study of the socio-economic characters were important for understanding the household level seed production decisions, the seed output and efficiency of the seed producer group and co-operatives in the Lamjung.