This paper aims to analyze how family farmers behave facing significant changes in the institutional environment of milk production chain. In this sense, we investigated main consequences and impacts on the social and productive organization of milk producing families as a result of the Institution Normative 51 by Ministry of Agriculture in the western region of Santa Catarina state. We used the approach of New Institutional Economics (NIE) and field research with strategic actors involved in the dairy production in the region. We concluded that the IN51 decisively influences the form of organization and participation of family farming in the milk production chain.