In the paper we provide an analysis of the potential of agricultural holdings for biomass production, an assessment of the level of farm sustainability and a description of the farming conditions of agricultural holdings depending on the degree of natural valuation of a given area. The approach makes it possible to assess the level of sustainability of farms, also in the context of their potential and taking into account the quality of the production space and its importance for increasing biodiversity. We use public and unpublished data of Statistics Poland (2005, 2007, 2016) as well as data on farms keeping accounts for the Polish FADN in 2016–2018. The paper shows that although concentration processes are progressing, farm productivity is increasing, but this is linked to specialisation, leading to efficient management of labour and land resources. Nevertheless, the decreasing number of farms with proper winter vegetation cover and optimal balances was confirmed. The farming conditions of the farms should take into account the share and degree of natural value of the production space of the areas (municipalities) in which they are located. The study found that farms in municipalities with a high share of high natural value farmland (HNVf) areas, compared to the other municipalities, characterized by lower livestock density per ha UAA, which indicates their less intensive organisation of agricultural production. Moreover, in these municipalities, as their natural value increased, the share of forests and waters in the total area increased and the share of permanent grassland in the total area decreased slightly.