Roy Pfaltzgraff of PFZ Farms is a fourth-generation farmer who, along with his father, farms 2,000 dryland acres of Phillips County, Colo. Having worked as a professional bookkeeper, Pfaltzgraff is no stranger to numbers. This aptitude and a knack for asking the right questions allow him to interpret and apply almost 40 years of statistics to his evolving no-till operation.
Pfaltzgraff credits his father with introducing no-till on the farm. By 1984, his father had noticed the connection between tillage and erosion, but still did tillage fallow. It wasn’t until Pfaltzgraff returned to the farm after college in 1999 that the Pfaltzgraffs decided to stop tilling altogether and they switched to chemical fallow. Although an improvement, the results weren’t what Pfaltzgraff had hoped, and he eventually left the farm due to lack of profitability and loss of his farm lease.
In 2016, he was asked to return. If he didn’t return, the land would be leased out, and the family would stop farming. Pfaltzgraff agreed, but his return to the farm wasn’t without conditions.
“I told my dad, ‘I’ll come back, but we have to change what we’re doing because I am not going to farm for 40 years and end up in the same boat that you’re in,’” Pfaltzgraff recalls. “He was physically and mentally exhausted.”
The 2017 Colorado Conservation Tillage Association conference catalyzed the change. With the Haney soil test and a new crop added to the rotation, the farm’s transition from no-till with fallow to no-till with a soil health emphasis began. Soon, Pfaltzgraff shifted his focus to soil health — integrating modern farming methods with the surrounding ecosystem and striving, in his own words, to “improve the system equal to, if not greater than, what Mother Nature does.”
In 2023, PFZ Farms reported $1.1 million in gross revenue, a substantial increase from $250,000 annually during tillage years. Despite the obvious income difference, Pfaltzgraff wanted to compare the cost differences between the farming systems by category and understand how the expenses for each system balanced out.
Questioning Everything
Pfaltzgraff put his background in computers and mathematics to work, analyzing decades of his father’s farm records to determine how to make the operation more profitable. He compiled data for three time frames, each reflecting a different cropping system: tillage years from 1991-96, no-till with fallow from 2011-16 and no-till with a focus on soil health from 2017-22. He was surprised to see that tillage appeared to be the most profitable approach in terms of net revenue (Graph 1).
DOUBLE TAKE. Net revenue records from three planting systems indicate tillage is the most profitable approach, as shown in the top graph, but a more accurate comparison of the three systems can be made when figures are adjusted to reflect fuel, seed, fertilizer, agronomy and insurance prices from 2017, shown in the bottom graph. Roy Pfaltzgraff
“When I looked at this,” Pfaltzgraff says, “I was like, this does not make sense. This does not reflect what I’m seeing. Then I start having to ask questions.”
Curiosity piqued, Pfaltzgraff began comparing input costs and noted that fertilizer expenses in 2012 and 2018 were within $100 of each other. Recalling the high price of fertilizer in 2018, he quickly realized that the low number reflected the farm’s transition from tillage to a no-till system. He realized that looking at the cost of fertilizer wasn’t enough. He also needed to understand why the numbers were what they were.
“When we see things, sometimes we have to look for that meaning behind it,” Pfaltzgraff says. “Sometimes we have to ask why this doesn’t quite feel right. I started doing that.”
Another incongruence soon presented itself, this time with fertilizer application rates. Pfaltzgraff observed a lower application of nitrogen (N) during the operation’s tillage phase than during no-till and soil health, a misrepresentation, he says, that reflects a cost-shared portion of the acreage that wasn’t being fertilized at the time.
What Is No-Till Soil Truly Worth?
Using data from the past 30 years, Haxtun, Colo., no-tiller Roy Pfaltzgraff investigates how a transition from tillage to no-till has impacted his 2,200-acre dryland farm’s bottom line. In this replay of his 2024 National No-Tillage Conference session, Pfaltzgraff compiles a side-by-side comparison of the ROI of these three systems and discusses factors beyond the numbers to determine if adding new methods are worth it. Click here to watch the video replay.
As time passed, Pfaltzgraff noted even more trends and changes that gave tillage and no-till with fallow an unfair advantage on paper. How did the recent addition of two employees factor in, for example? And what did all of this mean for the farm moving forward? A more in-depth review was necessary.
Closer Look
Pfaltzgraff began by doing an annual cost breakdown for each of the three timeframes. He found that 60% of total costs consistently fell into the same 6 categories: fertilizer, seed, herbicides, insurance, agronomy and fuel during the operation’s tillage period.
“There are outlier costs, but the 60% is what you try to control,” Pfaltzgraff says.
He recommends looking at major input costs, often fertilizers and herbicides.
“Can those inputs be replaced or managed differently to reduce those costs?” Pfaltzgraff asks. “When 15% of your cost is fertilizer and 15% of your cost is herbicide, you can affect 30% of your expenses by looking at those two things.”
“The residue I’m retaining is 3 inches of rainfall. That’s a quarter of our annual rainfall…”
Gas costs, for example, dropped when their 1965 GMC Tandem was replaced by a semi. Diesel usage also fell as a result of the farm’s conversion to no-till. What had been a 4-5 gallons per acre per year during the farm’s tillage years fell to 1.73 gallons per acre per year, effectively mitigating the impact of rising fuel prices.
Reduced spending in one area, such as fuel, may allow funds to be redirected. Before 2017, the Pfaltzgraff farm had been practicing a wheat-row crop-fallow or wheat-fallow rotation. These days, the operation boasts a diverse portfolio of as many as 18 crops at a time. Specialty seed and soil health costs have increased dramatically — Pfaltzgraff now spends $20,000 per year on agronomy vs. $275 in 1991, for example — but the crops bring greater returns, particularly from niche markets.
An accurate comparison of the three cultivation methods also required adjustments for inflation. Pfaltzgraff chose fixed rates from 2017 and applied them across the board. The left side of Graphs 2 and 3 depicts numbers taken from financial record books. Numbers for Graph 2 were adjusted using yields and prices per bushel from 2017. Those numbers were applied to the same acres in 1991 and 2011. The right side of Graph 3 reflects adjusted inputs such as fertilizer and fuel. As with the revenue graphs, Pfaltzgraff used the average price per pound of N in 2017 and the average cost per gallon of diesel in 2017, which allowed him to compare the most common costs and the highest percentage of costs equally. Notably, no significant difference exists between tillage and no-till numbers in terms of revenue or expenses (Graphs 2 and 3).
FINANCIAL ANALYSIS. PFZ Farms records show gross revenue consistently at or above $100,000 before adjustment (top). However, a decrease in revenue is revealed when 2017 prices per bushel are applied to 1991 and 2011 yields (bottom). Roy Pfaltzgraff
FUELING CHANGE. Pfaltzgraff discovered a noticeable difference in gross expenses attributed to the gallons of diesel per acre used with each system (top). When he applied 2017 average diesel prices to the number of gallons of diesel used in 1991 and 2011, the graph produces a more accurate comparison, indicating soil health practices use less fuel (bottom). Roy Pfaltzgraff
“This tells us that no-till is a tool,” Pfaltzgraff says. “It is not the end-all, be-all. If we’re out there doing no-till and not focusing on diversity and cropping, we’re not focusing on residue control, we’re not focusing on biology, and we’ve missed the boat. You might as well be doing tillage. I just can’t be using one tool out of the toolbox. I have to see how all these tools affect my operation.”
Graph 1, which initially suggested that tillage was the most profitable approach, reflects a more accurate comparison on the right, with adjustments for inflation in labor, fuel, seed, insurance and agronomy.
“I haven’t changed my land,” says Pfaltzgraff. “I changed how I’m using my land. I changed what my focus is. I’m now focused on the soil.”
Long-Term Payoff
One of the conditions of Pfaltzgraff’s return to the farm was buying new equipment. Included in the almost $618,000 worth of machinery purchased since 2016 are a Shelbourne stripper header, several grain cleaners and a machine that uses electricity to kill weeds.
While more efficient equipment would ultimately further PFZ’s mission of supporting soil health and diversity, the financial benefits weren’t immediately apparent. Noticeably absent in Graph 4 is any significant return on investment.
“We were paying off equipment,” Pfaltzgraff says. “Before, we were only making money 2 out of 6 years with a focus on soil health. Now that I have my equipment bought and paid for, I’m now at the top part of that curve. If we were doing either tillage or no-till traditionally with fallow, we would’ve lost money every year for the last 5.
CLEARER PICTURE. When net revenue figures are adjusted for capital expenditures, PFZ Farms shows a profit 2 out of 6 years while using a soil health approach before purchasing equipment, compared to 5 years of net loss that would have occurred with tillage or no-till with fallow. Roy Pfaltzgraff
“The amazing thing is as we go to soil health, my dad has gotten 10 years younger. He’s more excited about farming now than he was his entire 40 years of farming before. Mental health comes into this.”
Operation Inventory
Having considered the substantial financial ramifications of his capital investments, Pfaltzgraff shifted his focus to some less obvious, harder-to-quantify and overlooked aspects of his business. While no two farms will be the same, he encourages producers to inventory their operations’:
1. Employees. A proactive approach to soil health and diversity has allowed PFZ farms to hire employees for the first time in its 144-year history. Previously, the owners operated the farm while also working off the property, hiring custom work when necessary. These circumstances were ultimately unsustainable.
“The labor of farming had simply become too physically demanding,” Pfaltzgraff says.
Today, the farm employs two full-time staff members. Pfaltzgraff says quality employees are an investment and play an integral role in the operation’s continued success.
“I haven’t changed my land. I changed how I’m using my land…”
“Taking care of good employees is not expensive because, believe me, if you have a bad employee, you’ll find out what it really costs,” Pfaltzgraff says.
Despite its continued growth, Pfaltzgraff reports an increase in time spent with his family. The distribution of labor also allows him to explore innovative ideas to further the farm’s mission, including conducting new research projects every year.
2. Drought Mitigation. No-till farming promotes healthy soil structure, which increases rain infiltration. But Pfaltzgraff takes it a step further. He speaks highly of his Shelbourne stripper header, which he uses on oats, millet and grain sorghum. It’s not without trade-offs, he acknowledges. The equipment might spill a few bushels on the ground, but it’s worth it. Combined with narrow row spacing for sunflowers and grain sorghum and continuous cropping practices, the residue left by the Shelbourne reduces evaporation, allowing Pfaltzgraff to take full advantage of the little rainfall his area receives in any given year.
“The residue I’m retaining is 3 inches of rainfall because the crops are more tolerant of dry spells,” Pfaltzgraff says. “That’s a quarter of our annual rainfall.”
3. Reduced Fertilizer Dependence. Trade-offs may also occur where fertilizer application rates and yield are concerned. His corn typically yields 122 bushels per acre, but the number doesn’t concern Pfaltzgraff.
“My N efficiency on my corn is less than ½ pound of N per bushel because of my soil health,” Pfaltzgraff says. “I’m willing to give up a little bit of yield to be able to have these other methods. I don’t care about yield. I have really healthy soil.”
4. Increased Soil Organic Matter. Organic matter is a hallmark of healthy soil, and Pfaltzgraff is seeing a major shift in soil health in the last few years.
“Our average organic matter on the farm in 1991 was 1-1.5%,” he says. “I live in the desert. The neighbors run between ½ and 1%. Now the average on our farm is 2.5%. We have two fields that measured over 3%. Every percent of organic matter is an extra week I can go without rain. If I can buy 3 weeks, that’s huge for me because in our area we might get a couple of rainfalls a month.”
5. Risk Mitigation. Beyond improved soil health, Pfaltzgraff’s diverse cropping rotation equates to less overall risk of widespread crop loss. Graph 5 compares growth periods for a traditional 3-crop rotation and one in which 9 crops are planted and harvested throughout the growing season. Crops and labor are both spread out in the second scenario and therefore less susceptible to a period of unfavorable conditions. Varying planting times allow him to take advantage of favorable growing conditions that may occur early or late in the season, Pfaltzgraff points out.
MITIGATING RISK. Each oval in this diagram represents a different crop and its growing season. Each line represents a month of the year. Pfaltzgraff says a traditional 3-crop rotation is vulnerable to unfavorable weather conditions and potential widespread loss. A more diverse portfolio serves as his risk mitigation tool and a way to distribute labor more evenly throughout the year. Roy Pfaltzgraff
6. Free Time. While more crops may sound like more work, Pfaltzgraff has found the opposite to be true. Diversifying gives him more free time.
“I don’t have 700 acres of corn anymore. I have 100,” Pfaltzgraff says. “My air seeder can do 180 acres in a day, easy. That allows me all kinds of time. I can go twice as fast with the Shelbourne. That machine is way more efficient. There’s a lot less wear and tear on my combine.”
7. Wildlife. The benefits of PFZ’s soil health approach extend far beyond the field crops.
“You should see the wildlife populations I have,” Pfaltzgraff says. “If the wildlife is doing well, that tells me that the wildlife that you can’t see below the soil is doing well. We have to look at that.”
“The neighbors run ½-1% organic matter. The average on our farm is 2.5%…”
8. Bookkeeping vs. Record Keeping. Consistent and accurate record keeping is key to progress. Pfaltzgraff says bookkeeping is for accounting purposes only, while record keeping has enough detail for analysis decades down the road. Regularly updating records with a consistent level of detail and using the same units and measurements will simplify future comparisons. Using software that can separate costs from quantity — a function not readily available with traditional accounting software like QuickBooks — will also make analysis easier.
“If you could go in there and show your banker what you did 10 years ago and what the costs are now, that’s going to get the banker’s attention,” Pfaltzgraff says. “That can be the thing that skews them one way or another. It might not affect you, but it might affect the next generation and what they can do. Keep that in mind.”
Resisting Pressure
Above all, Pfaltzgraff stresses the importance of proactively managing the farm for the future.
“There’s a lot of pressure from the outside to maintain or expand, to conform to the way things have always been done,” Pfaltzgraff says, “but nobody knows your land like you do. We have to recognize that sometimes stuff won’t work, but we can’t let the community tell us it won’t work because your land is different. If you examine something that doesn’t work and you move forward and you make it better, it’s not a failure. We can’t be afraid to make mistakes because sometimes we learn a lot from making mistakes.”
Considering the data, one might conclude that the only real mistake lies in maintaining the status quo. These days, PFZ Farms is a thriving hub of activity, a combination research farm, education center and producer of farm-to-table products.
“Sometimes we have to step away from what everybody expects and find out that things are possible,” Pfaltzgraff says. “Our operation is a prime example of that.”
