The recent moves towards the insertion of biofuels in the energy matrix of a number of countries are opening new prospects for agricultural production and for agroindustrial chains. The emergence of this new productive base raises new research issues: in what circumstances are the structuring, organization and implementation of these biodiesel productive chains taking place in Brazil? What are the effects of biodiesel production on local economies? Hence, the central objective of this study is identifying their economic and social impacts at the regions where they are installed. The analytical structure was constructed based on theories of regional and spatial economy: location coefficient, shift-share, theories of industrial location. A preliminary analysis identified that a biodiesel productive arrangement is emerging in the State of Piaui, Northeastern Brazil, with the purpose of stimulating regional development using alternative oil-bearing crops. However, the agricultural project in the town of Canto do Buriti/PI has faced problems of both a cultural and productive nature. Preliminary findings reveal productive, organizational, managerial and governance related difficulties and challenges that need to be faced when establishing a new productive base in a location that up to that point lacks a productive tradition. Crown Copyright (C) 2009 Published by Elsevier Ltd. All rights reserved.