Data were 49,693 first 305-d lactation milk kg, fat kg and fat percentage from the Gdańsk region. Black and White cows were daughters of 523 Black and White and 27 Holstein-Friesian bulls. Herds were stratified into three levels, based on the mean milk yield. Genetic and residual variances were estimated by the restricted maximum likelihood method (REML). The model included effects of herd-year-season of calving, and of genetic groups. The same model was used for BLUP evaluation of sires. All calculations were done on linear and logarithmic scales, within the three production levels. Heritabilities of milk yield, fat yield and fat content increased with increasing mean production. Similar estimates were obtained on the linear and log scales. Genetic variance increased on both scales, the same way heritabilities did. Error variances of milk and fat yield followed the same pattern on the linear scale. On the log scale for those two traits, the highest error variance was obtained at the medium production level. Correlations between sire breeding values estimated at different production levels were close to expected correlations. Genetic correlations between levels were Iow for fat yield, especially between the high and the other levels. This seems to suggest a certain amount of genotype-environment interaction. Evaluation and selection of sires at Iow production might adversely affect genetic progress.