Iranian Cooperative History

Iranian Cooperative History

Traditional Coops in Iran

In ancient Iran, there were groups of well-off benevolent people who used to venture in development activities such as construction of roads, bridges, caravanserais, mosques, water reservoirs, buildings, and other public facilities; ordinary working class citizens also contributed their shares by power of their arms and through cooperation if they did not have sufficient capital or liquidity. A concrete example of cooperation could be traced among rural dwellers of the country, a commendable practice inherited from old times and still prevailing among Iranian farmers.

Like many other rural communities all over the world, Iranian farmers helped one another and participated in group activities including cultivation, weeding, irrigation and harvest. Such cooperation was a collective cultivation while preserving rights of ownership and individual profit from agricultural land. Villagers still practice this type of cooperation that seems to be more natural than working in the form of agricultural cooperatives.

These traditional cooperatives are considered a high-profile partnership in human community as well as in Iranian society, though it is called differently among different cultures. Some old-fashioned cooperatives were named Boneh or Haraseh, Wareh and so on.

Within the past couple of years, social and economic developments in the fabric of rural community, particularly by introducing agricultural machineries, extension of deep and semi-deep water wells, and using engine pump has diminished traditional group work or changed its framework, which resulted in creation of new form of cooperation and partnership in purchase, maintenance and sharing agricultural machineries.

Iranian Formal Cooperatives in Pre-Revolution Era

Started since nineteen century, formal cooperatives are deep rooted in capitalist and socialist countries. However, this is a rather modern phenomenon in Iran, in fact only some decades old, if disregarding its records in conventional type of cooperatives. The launch of formal cooperatives in Iran dates back to inclusion of some articles in the Trade Law of 1924. These articles dealt with producer and consumer cooperatives. In 1935, cooperatives initiated their formal activity in terms of corporation and registration and a rural cooperative society was established in Davoud-Abad of Garmsar City by the government. The basis for establishment of the mentioned cooperative was Trade Law of 1932.

Since birth of the first cooperatives in Iran up to 1941, three rural cooperatives with a membership of 1050 farmers came into existence. Based on reference studies on cooperatives of this period, those who had visited western countries for acquiring knowledge and technology, had first been introduced to economic and social organizations. Establishment of the said cooperatives is indebted to the efforts and interest of these people. Nevertheless, illiteracy and its mental effects among disadvantage social classes hampered further growth of cooperative societies. It is interesting that a cooperative, under the regulations that have been devised for, was peculiar to industrial societies.

By 1941, Reza Khan Pahlavi, the then Iranian monarch, assigned his Minister of the Interior to chair a delegation and visit near and far cities and villages. The mission was to develop cooperatives through raising people’s awareness about cooperative rules and concepts and to conduct related trainings to civilian staffs. Also, they wished to stimulate the spirit of collective responsibility among all nationals, particularly the producing classes of society. The government took some measures including distribution of state-run factories’ products to consumer cooperatives. However, the outbreak of the Second World War overshadowed all national and private plans. But promotion of cooperatives with the same mentioned particulars continued in two angles during post-war era.

On the one hand, the individuals with western cooperative mind-set established a few consumer cooperatives in the cities to respond to the post-war problems, and on the other hand, certain foreign institutions took up actions for starting and running cooperatives in Iran.

By September 1941, several delegations from various countries, especially United States of America, visited Iran in order to render technical assistance to Iranians. They also started operations in certain fields of economic and social affairs, including cooperative societies. Actions were taken for emergence and development of this socio-economic movement, such as providing technical and financial assistance. The most important institutions that made their contribution to this movement are as follows:

1.      UN affiliated agencies including FAO and ILO, mostly provided technical and guiding assistances for development of cooperative movement in Iran and a number of UN experts visited Iran to conduct trainings and guidance in the field of agricultural cooperatives and employee’s consumer cooperatives to the concerned public organizations and Ministries. Moreover, they procured the fund for dispatching educated civilian staffs to abroad, aiming at study of cooperative affairs and issues.

2.      American Board of Economic & Development Operation in Iran not only provided technical assistance for promotion of cooperative movement, but also ventured to establish employee’s consumer cooperatives, rural consumer cooperatives and agricultural cooperatives, as well as supplying these societies with financial aid and means of work. The mentioned board was founded in 1951 concurrent with enactment of regulations and directives on distribution of royal lands among farmers. Major duties of the said board could be outlined as follows:

a.       To study economic and social conditions of employees, particularly farmers in villages and rural areas

b.      To boost scientific and technical exchanges in various fields of land distribution and agricultural extension based on modern agricultural trends for improvement of farmers’ labor and sustenance

c.       To conduct scientific and technical guidance for establishment and management of producer, credit and rural consumer cooperatives

d.      To procure financial assistance by both Iran and US within the framework of predicted budget and drawn up agreements on implementation of relevant programs

e.       To ensure domestic and foreign technical experts to carry out programs of health care and cultural cooperative

f.        To conduct educational and performance operation on cooperatives international principles.

3.      Other American institutions such as Ford Foundation and Middle East Institute were also of some helps in terms of technical assistances, guiding Iranian experts and encouraging people to start a cooperative.

4.      International cooperative institutes from European countries offered scholarships to Iranian to study abroad and dispatched cooperative specialists to Iran for technical helps.

At the first Cooperative Commission held in the Planning Organization, with the membership of a group of experts of Article 4 and United Nations, national cooperative plans have been discussed and approved by the commission. To implement cooperative programs, Article 4 undertook the expenditures of dispatching 50 civilian staffs to abroad to pass cooperative training courses. It also concluded a contract with Iranian Government and committed to assume cooperative training of civilian staffs.

The number of set-up cooperatives, including rural cooperative funds and consumer cooperatives, barely reached one hundred societies up to 1951.

In 1953, the bill on the first Cooperative Act of Iran was submitted to the parliament. It was inspired by cooperative laws of other countries.

In 1955, the said bill was passed by the then parliament after some amendments had been incorporated and the first Cooperative Act of Iran was approved. It made the basis of establishment of many cooperatives, particularly after 1962.

In 1962, by virtue of Note 2, Article 165 of the Act on Land Reforms, the farmers who received agricultural land had to already register as a member of rural cooperative society. As a result, more than eight thousand rural cooperatives were established within a short period of time, which later merged together and formed about three thousand cooperatives. Since 1967 that was announce as the year of cooperation, consumer, distribution and… cooperatives recorded a significant development quantity-wise. Thereafter, Central Organization for Rural Cooperatives of Iran (CORC), National Central Cooperative Organization, Ministry of Cooperatives & Land Reforms and… were established.

In 1971, Cooperative Societies Act was approved, parts of which are still binding as the basis of cooperative operation.

Iranian Cooperative Diversity

National Central Cooperative Organization (Non-Employee Urban Cooperatives)

In order to promote cooperative principles throughout the country, to formulate relevant legislation and to meet cooperative requirements to appropriate facilities, National Central Cooperative Organization was founded in May 1967. It joined Ministry of Cooperatives and Rural Affairs in 1956 and upon dissolution of this ministry, it went under supervision of Ministry of Commerce. By establishment of Ministry of Cooperatives in 1991 and on the strength of Cooperative Sector Law, approved in September 1991, the organization affiliated to Ministry of Cooperatives. 

Number of Cooperative societies and unions associated to National Central Cooperative Organization up to February 1979, the beginning of Islamic Revolution, was as follows:

a.       Cooperative Societies: Total number of cooperatives affiliate to National Central Cooperative Organization, such as consumer, housing, credit, distribution, non-employee urban services, was 1340 societies with a membership exceeding to 803,893 by February 1979.

b.      Cooperative Unions: There were 20 non-employee urban cooperative unions with a membership of 369 cooperatives by February 1979.

Central Organization for Rural Cooperatives (CORC)

Established in 1967 in effect of certain articles of the Act on Land Reforms approved in 1962, CORC’s objectives and tasks could be outlined as follows:

a.       Education of cooperative principles and training supervisory board for directing members of cooperative societies in rural areas.

b.      Credit supply programs for cooperatives aiming at increasing farmers’ products and income as well as marketing and sales of farmers yield.

c.       Communication with national consumer cooperatives, also with concerned international organizations.

During the past years, CORC has been supervised by Ministry of Agriculture. In February 1979, it covered a total of 2,939 rural cooperatives with a membership of 3,010,202.

Number of rural cooperative unions by February 1979 was 153 with cooperative membership of 2,923.


Employees Cooperative Societies

Employees Cooperatives including labor and producer, consumer, housing and credit were established since 1967 and the number of these societies exceeded to 1,673 and membership of 423,840 by February 1979, for instance an employee cooperative union with 510 cooperative members was registered in the same year.

Rural Producer Cooperatives

Producer cooperatives came into existence after land distribution operation for integration of national lands, the law of which was approved in 1970.

The government established rural producer cooperatives in order to boost up farmer yields per unit area, while preserving farmers’ individual ownership on land lots, enhancement of cultivation plans, optimum use of water and soil resources and farmers’ income increase.

Number of rural producer cooperatives was 39 including 258 villages and farms with 11,200 land owners and total surrounded surface area of 99,546 hectares.

Post-Revolution Cooperatives

The outburst of Islamic Revolution has changed public belief about cooperation. Revolutionary forces believed that revolution by itself is a manifestation of cooperation; they became excited of collective cooperation in the course of goods fair distribution during long-lasting strikes of the time and were inspired for future endeavors.

New waves of hope swim in the thought of statesmen, in legislation and the new Constitution. This time, cooperation was highlighted and introduced not only as a tool to meet common needs, but also a path towards economic development, a high criteria for employment generation and a leading sector among other economic sectors of the newly- established republic system of country.

Cooperative movement was incorporated in the Constitution and this laudable method which was once considered an economic approach, was credited with spiritual aspects. It manifested strong resolve of Islamic Republic of Iran for realization of economic justice and opened a new door to justice lovers. All reasons and trends of cooperative movement as the key economic sector of the country could be outlined in Articles 43 and 44 of the Constitutions.

Article 43 defines provisions for national economy to achieve objectives of social economic independence, deprivation and poverty eradication, satisfying human requirements in the course of development. Provision of decent job means for all, particularly for those who are able to work but have no access to its facilities in the form of cooperative through granting interest-free loans or any other legitimate way, which prevent from wealth accumulation by special groups, nor it allow government to turn into an absolute employer (Constitution, Article 43 & 44).

Article 44 of the Constitution stipulates that national economy falls into three public, cooperative and private sectors. It explicitly shows the importance of cooperative sector when it reads that public sector operation should be limited to a certain extent and that private sector is complementary to the two other public and cooperative sectors. The provisions specified for legal support of triple sectors’ ownership suggest the strength of cooperative sector and an emphasis on its development (ibid).