The National Program for the Production and Use of Biodiesel (PNPB) was launched in 2004 with ambitious objectives to promote regional development in periphery regions as well as to lever the productive inclusion of family farming in the biodiesel chain and therefore improve the well-being of at least 120 thousand families of small producers. Between 2005 and 2019 the production of biodiesel production increased from 736 m³ to 5.3 million m³. However, unlike announced in the PNPB's initial plans and official speeches, the two main raw materials used for the production of biodiesel are soy and animal fat, and not the alternative sources supplied by family farming. The main instrument used by the PNPB to encourage the acquisition of raw material produced by family farming is the Social Fuel Seal (SCS). It is not clear to what extent the SCS has actually benefited family farmers and to what extent it has contributed to local development. This work assesses the inclusion and participation of family farming in the biodiesel production chain in Brazil, identifies and measures the impacts of biofuel production on family farming and the Brazilian economy. It relies on the experience of two states that stand out as the largest producers of biodiesel, Rio Grande do Sul and Mato Grosso, which have very different social and productive configurations. In Rio Grande do Sul, family farming plays a major role in the agricultural sector while large scale production in cropped areas greater than 1,000 hectares prevails in Mato Grosso. The comparison has thus allowed the identification of different impacts of biodiesel production based on family farming and large-scale production on local economies. The Input-Product Theory was used as a methodological basis, accompanied by the collection of secondary and complementary data to understand the structure of the biodiesel chain and family farming in these States. The research shows that the production of biodiesel via family farming in Rio Grande do Sul is 66 times greater than Mato Grosso, generates approximately 19 thousand jobs and has considerably higher impact on the local economy than that observed in Mato Grosso. The differences are mostly explained by the social and economic structure of each state, in particular by the high participation of family farming in Rio Grande do Sul. The study also compared the impacts of biodiesel and fossil diesel production in the 2 states. It concluded that one million barrels of oil of family biodiesel in Rio Grande do Sul generates 7.7 thousand jobs, while on the fossil route it generates 1.6 thousand jobs. In terms of wealth generation, the greater impact of biodiesel production on the Brazilian Gross Domestic Product (GDP) is justified by its price being higher than mineral diesel oil.