The present study contributes to identifying obstacles to the development of a local biodiesel agro-industrial system (AGS) in the state of Minas Gerais, Brazil. The research questions are: “How do local social characteristics influence the organizational effectiveness of agents involved in the joint production effort?”; and “How can the institutional arrangement of biodiesel production be described?” The method adopted is the case study, focused on family farmers served by the Family Farmers Rural Extension and Technical Assistance Company (EMATER). This state organization introduced castor beans (Ricinus communis L.) to family farmers as an alternative crop to supply a processing plant (Darcy Ribeiro Biodiesel Plant—DRBP) in northern Minas Gerais state, Brazil. These family farmers are not horizontally organized, and sign individual contracts with DRBP. The paper concludes that the primary obstacle to developing the biodiesel AGS with castor beans in Minas Gerais is the lack of horizontal organization among family farmers.