Urban sprawl is one of the most important reasons behind conflicts over farmland use. In that context, agricultural policy can be perceived as a guardian protecting farmland for agricultural purposes. The paper aims at investigating the role of the Common Agricultural Policy (CAP) in shaping farmland market in Poland. With use of regional Computable General Equilibrium (CGE) model we found out that CAP has led to farmland price distortions in most Polish regions but at the same time it has allowed to maintain land in agricultural use particularly in regions which heavily depend on agriculture and have fragmented farm structure.