The objective of the study was to investigate how smallholder farm communities could sustain economically viable agricultural production in the salt-affected areas of Al-Musayyeb in ‘Central Iraq’. It aims at opening a new dimension to farmers and policy makers on how to increase production in soil-affected areas by determining the extent to which it is possible to raise efficiency for salt-affected farmers with the existing resources base and available technology. There were 220 households, randomly stratified, interviewed based on severity of salinity indicators. The scores and determinants of technical efficiency (TE) and allocative efficiency (AE) were identified using stochastic frontier cost and production functions. Empirical findings show that the estimated AE of the farms in the Al-Musayyeb area varied in the range of 56–94%, with a mean of 59%. This suggests that the average farmer needs a cost-saving of 41% to attain the status of the most allocatively efficient farmer. Findings show that technical efficiency was in the range of 57–98%, with mean of 89%; and economic efficiency was 32–84%, with mean of 52%. These widely varying indices of efficiency among Al-Musayyeb farmers in a similar agro-ecological locality indicate great potential to achieve productivity growth through improved efficiency, using existing technologies and the available resource base in the study area. Results of the estimated coefficients indicated that family labor and land tenure are significantly and positively correlated with technical and allocative efficiencies, while off-farm income contributed to technical efficiencies. These results suggest that land tenure in this farming system and increased investment in extension services could jointly contribute to improved efficiency in in the studied area. Therefore, efforts directed to generation of new technologies should not be neglected.