PACT

PACT: Payments Accomplishments Cooperatives Trade

It must be easier for subsistence farmers to fully join the official economy
than to remain on its fringes and muddle through in poverty

PACT is an economic infrastructure with easy onboarding at the bottom of subsistence economies;
PACT is proposed in two versions: PACT and PACT Light
We are currently looking for funding to set up the first test

Millions of people around the globe live in rural areas where physical and economic infrastructures make it almost impossible for them to join the money-based economy. Markets are hard to access, and surplus produce that could be sold is in small amounts and tends to spoil fast in the hot climate. Small scale sale is thus unprofitable, and the reward for any effort to create value is not commensurate. As a result, people cannot work themselves out of poverty.

PACT (Payments Accomplishments Cooperatives Trade) is a proposed economic model and infrastructure that will make it easy for individual subsistence farmers and households to onboard the local economy. People will receive direct payment from their first encounter with PACT, they will become PACT members, and they will get access to free education that will earn them PACT Credits.

There is a PACT Umbrella and Local PACTs, designed so that over the course of seven years, each Local PACT transforms from an externally funded project to a cooperative that is entirely run and owned by the local members. The gradual transition allows for the participants to learn how to run it before they fully own it and take over; the “human infrastructure” needs time to evolve and mature with the PACT.

PACT is inspired by the way Danish peasants, farmers, and workers self-organized cooperatives and a flourishing economy between 1860 and 1910: Denmark went from one of the poorest countries in Europe to one of the richest. The secret ingredients added to the rural communiteis were adult education, new knowledge, and fresh ideas.

PACT is a model that fast-tracks what Danish peasants, farmers, and workers did 150 years ago.

PACT Light

PACT Light involves the PACT economic infrastructure, the PACT Credits system, the plastic recycling program, trucks for produce transportation, education for the villagers, and the staff needed to run it. It also involves a national PACT Umbrella that can support all Local PACTs, but it does not involve any physical constructions at the onset except a grocery sales.

PACT

The full-scale PACT involves everything in PACT Light plus pre-fabricated PACT Clusters consisting of a grocery store, a pharmacy, a lecture & study room, public toilets and washing room, and a produce garden where better agricultural techniques can be taught to local farmers. It also involves setting up a PACT Institute that will do research and strategic development of the PACT concept.

PACT Light

The history of cooperatives in the Nordic countries suggests that the optimal size of each Local PACT structure is probably between 100 and 300 households, at least in the beginning. Testing the model will show what the optimal number of members will be within any given context, and at what point more local paid staff can be engaged.

The scheme is three in one:

  1. Sale of agricultural produce to and through the cooperative.
  2. Credit for collection of plastic waste from the community.
  3. Education.

These are the fundamental elements in PACT Light that need to be in place from the beginning:

  • PACT National Umbrella, a registered cooperative with staff who start up Local PACTs with bylaws, boards, and initial activities (paid by project funding).
  • Training of this staff so they understand the model and how to run cooperatives.
  • A refridgerated truck and a paid driver; buys produce and plastic in village(s) and sells the produce at the nearest market and takes the plastic to a factory.
  • Capital (cash) for buying produce and collected plastic, paid to the farmers at their home in the village(s)
  • PACT Credits, a membership and credits system: Each adult household member becomes a member of the Local PACT at the first sale from their household. At the point of their registration, each individual gets:
    • an individual account in their own name (the system thus doubles as giving people a legal status),
    • a QR-code that gives them access to their personal account (can be scanned with a phone),
    • cash in their hands for their produce and/or for plastic,
    • a number of credits that matches their sales; the credits are personal and accumulate; they cannot be transferred to anybody else (which may empower women).
  • The credit system is a kind of savings account that gives people access to:
    • The free education that will give them voting rights in their Local PACT and the main PACT National UmbrellaFree education in better farming techniques
    • Further credits can be earned by participating in education and, say, keeping daughters in school rather than getting them married before they have an education and turn 18.

This is the initial set-up for starting PACT Light in a country. The individual farmer can sell as little as one tomato or half a kilo of collected plastics and get paid at their front door. The payments for plastics serve two purposes: getting rid of plastics in nature, and empowering women and others who may not have access to selling produce.

From the beginning, the program should offer education locally in food safety, hygiene, fermentation processes, reading, math, law, bookkeeping, cooperative management skills, etc. Participation gives credits, and members need to take at least one class in What is a cooperative and how to run it? to get voting rights and to run for a seat on the board.

After the first year, 1 of the 7 members of a local board is up for election among the members of that Local PACT; the second year, 2 of the 7, etc. Their second year, members of local PACTs become members of the main PACT National Umbrella along with the staff and the initiators of the PACT. As a Local PACT grows, the profits should gradually pay for the driver/marketer. When a Local PACT can cover their own expenses and when the majority of board members of a Local PACT are locals (i.e. 4 out of 7), they may start contributing financially to PACT National Umbrella.

With economic and production growth, processed, value adding food production should be initiated, and there needs to be quality control in collaboration with a relevant local agency or university. Once there is a production of processed foods, there should be a PACT label and a collective effort among several Local PACTs to start their own cooperative PACT stores or get their products into supermarkets in the cities under the same brand. Not just the farmers but also the consumers can become members in the cooperative stores. The core idea of PACT is that the full infrastructure for sales, education, auditing, running, and learning how to run a cooperative is set up from the beginning, and funding this should be seen as investments in long-term structural, economical, societal, and human development and resilience. Behind PACT is a consortium of initiators who fundraise and audit all branches of the PACT structure.

Because the foundational infrastructure is set up from the beginning, PACT may grow in number of Local PACTs. The structural change from year 1 to year 2 is that one of the local members is elected by the members to replace one of the professional board members, earned credits can be turned into light tools, and whenever somebody has been a member for one full year and has taken the “What is a cooperative and how to run it?”-class, they also get voting rights in the PACT Umbrella.

In Local PACTs, each year, one paid / professional board member is replaced with a local member, and increasing numbers of credits earned can be transferred into heavier equipment such as farming machinery.

As Local PACTs grow in size and financial strength, and as more heavy tools can be used in farming, Local PACTs and main PACT National Umbrella can help members of a Local PACT initiate their own cooperatives for value added production, such as pickled goods and cheese production. PACT stores may also be started, which will have consumers as members as well; these stores can pay both the local farmers’ PACTs and the main PACT National Umbrealla, which means that the main PACT Umbrella should become financially independent and not need external funding anymore:

PACT the full program

The full PACT program includes setting up a PACT Institute and starting up PACT Local Clusters with pre-fabricated buildings, teaching facilities, and access to wifi, which also means there has to be a PACT Cluster Factory.

A PACT Local Cluster will be a staffed community and trade center that will boost the local development and job creation both in and around the town. These are the elements that will lift the full PACT to a different level:

PACT Institute

The PACT Institute will be a strategic development institute that can help set up PACT National Umbrellas in new countries and help these set up their Local PACTs or PACT Local Clusters.

The PACT Institute will run the PACT Credits System, do research and find and promote best practices from PACTs, and it will provide assistance with setting up, say, quality and food safety controls as PACTs start value added production of processed food.

PACT Institute will also provide teachers training and other professional training and conferences for employees accross the PACT system.

PACT Local Clusters

A PACT Local Cluster is a mix of on site brick buildings and prefabricated containers equipped with solar panels, wifi & electricity and/or sanitation. The choice of structure will depend on local conditions, including maintenance and keeping the facilities clean. A PACT Local Cluster is set up and staffed with:

  • A grocery store
  • A pharmacy with an office and wifi
  • A study & lecture room
  • Public toilets & washing room with water and sewege
  • Overnight accommodations for workers
  • A water management system for waste water and production of safe fertilizer
  • A school garden

Local PACTs versus
PACT Local Clusters

Setting up Local PACTs without these faclities is, of course, a lot cheaper than setting up PACT Local Clusters. Not just because of the buildings and their installations, but because a PACT Local Cluster is also staffed with teachers, a water management technician, store personnel, security, and cleaning staff.

PACT Local Clusters, on the other hand, will be a radical improvement of conditions in rural towns and will lead to local job creation as more people will get more education and new skills, and there will be internet access.

The pharmacy will guarantee the quality of the medication is sells and it may have a pharmacist or a nurse on staff.

PACT Cluster Factories

To keep the establishing costs of PACT Local Clusters down, we suggest a PACT Cluster Factory where containers are equipped with wiring, wifi, and plumbing so they can easily be set up in rural towns as PACT Local Clusters. This will make the logistics of setting up PACT Local Clusters and scaling PACT a lot easier, and skilled labor for wifi, electricity, and plumbing will be gathered at the factory.

The Factory will also serve as a repair shop for Cluster containers, so that beyond small repairs locally, a grocery store container may be fully replaced while the worn out container goes back to the factory to be fixed.

Cultural, political, and economic context

The PACT goal is that the initiation of an economic infrastructure with easy onboarding for individuals in subsistence villages will, over the course of 7 years, lead to a self-sustaining economic infrastructure that will benefit both the poorest farmers, the local economy in general, education level, and, therefore, also resilience towards climate change.

Local traditional culture and context and the overall political and economic landscape may need to be considered before starting PACT in a country or region, which means that before starting a PACT there needs to be extensive research. Local clergy may be one of the local points of collaboration for information about the program, and cultural traditions, such as Ubuntu in parts of Africa, may contribute to an organic integration of PACT into local culture. Local media, particularly radio, may also be considered.

Secondary economic benefits and development

As credits accumulate among individuals, the total credit score in a village or several villages in an area will become an indicator of local economic activity, educational level, and robustness over time, which means it will also be an indicator of where other, commercial investments in small or larger scale production may be attractive.

Eventually, since collectively accumulated credits represent value, the accumulation of PACT credits may be turned into a crypto currency; collectively accumulating PACT credits may resemble mining, say, Bitcoin, but contrary to Bitcon, the value of the PACT crypto will be rooted in the real economy and real value creation.

Looking for partners and funding to test PACT

Nordic Bildung and partners around the globe are currently putting together the PACT consortium (July, 2024), and we are looking for funding to setting up the first PACT initiative so we can test the model.

Please contact us at if you are interested in collaborating.