With many of the poor people in Brazil living in rural areas, local governments have intensified their efforts to design and implement effective policies that boost rural development. In 2004, a national program for production and use of biodiesel was launched aiming at increasing income among less endowed family farmers across the country. With expectations building on further expansion of the mandatory blending of biodiesel with fossil diesel, national and local government bodies are challenged by the search for policies able to foster biodiesel crop production through the wider cultivation of crops that produce more oil than soybean (e.g. sunflower and castor bean) and by improving the participation of less endowed farmers, especially in semi-arid regions. Therefore, the objective of this study was to perform an ex-ante integrated assessment of the socioeconomic and environmental impacts of four biodiesel policy scenarios towards different farm types in a semi-arid and more humid region of southeast Brazil. The applied modelling framework was a combination of a technical coefficient generator (TechnoGIN) and a bio-economic farm model (FSSIM). We explored the impact of market-driven (bonus price policy), input provision (fertiliser and land preparation policy) and oil production (oil mill policy) policy scenarios on soybean farmers in Chapada Gaúcha and maize/beans farmers in Montes Claros. The impacts of the different policies on farm gross margins, oil crop production, labour requirements, nitrogen losses and biocide residues were assessed against the baseline scenario. Our results indicated that the scope for biodiesel crops on smallholder, non-soybean producers in Montes Claros is less evident than in Chapada Gaúcha, particularly among the less endowed farmers for whom the increase in farm gross margin in all scenarios is limited to only 6% while oil production was 140 kg per farm, which is very low compared to the 41% increase and more than 48,000 kg of oil of soybean producers. The most effective policy scenario was the provision of inputs such as fertiliser and land preparation. Because in Montes Claros farmers have limited access to fertiliser, machinery and biocides, strategies that enable farmers to increase their cropped area (i.e. land preparation policy more than doubled the crop area) and crop yield levels (i.e. fertiliser policy almost quadrupled crop yields) have highest potential to benefit these farming systems.