This study conducted in the Thanjavur district of Tamil Nadu, has indentified the problems being faced by dairy farmers due to scarcity of farm labour for agricultural and livestock production. The study is based on the data collected from 40 selected respondents involved in crop production and dairying in the study area during the year 2008-09 through primary survey. The study has revealed that the implementation of Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has provided employment opportunities to rural workers and has checked the migration of farm labour from villages to cities and nearby industrial townships. All the eligible family member of landless dairy farmers had the job cards, but medium and large dairy farmers possessing agricultural land, prefer to work at their own farms. These farmers have reported that they were facing acute shortage of labourers during peak paddy planting and harvesting due to MGNREGS. The labour wages have increased significantly from Rs 60 to Rs110 per day since the implementation of MGNREG scheme. It has been observed that milch animals of some landless/ small dairy farmers are being maintained by the children or aged family members, as majority of adult family members prefer the MGNREGS jobs to earn wages. These adult members have complained about not getting 100-day wage employment as per provisions of scheme. The wage payments are also delayed after completion of work and they face problems in getting the job cards. The study has concluded that the minimum wages under MGNREGS should be increased cautiously keeping in view its impact on agricultural/ livestock activities.