COOPERATIVES (šerkat-e taʿāwonī), economic organizations owned jointly by and operated for the benefit of groups of individuals. Such cooperatives were first introduced and recognized in Persia under the Commercial code (Qānūn-e tejārat) of 1303 Š./1924, which provided for both production (tawlīd) and consumer (maṣraf) cooperatives. Since the 1940s the state has been actively involved in the development of different forms of cooperatives through special legislation, technical and financial aid, and actual formation and supervision. In cities the government promoted formation of consumer-credit, housing, and retail-distribution cooperatives for government employees, factory workers, and the general public. In rural areas cooperative societies were rapidly expanded after the implementation of the land-reform program of the 1960s.
LEGAL FOUNDATION FOR COOPERATIVES
Under Article 20 of the Commercial code of 1311 Š./1932 production and consumer cooperatives were recognized as constituting one of seven categories of commercial company (šerkat-e tejāratī). Special provisions for the two types of cooperative were included in Articles 190-94 and 213-14.
In 1332 Š./1953 the cabinet of Moḥammad Moṣaddeq, acting under the “full-powers act” (Qānūn-e eḵtīārāt) of 20 Mordād 1331 Š./11 August 1952, adopted legislation for cooperative societies (Lāyeḥa-ye qānūnī-e šerkathā-ye taʿāwonī), which were thus granted legal status independent of the Commercial code. Of the fourteen articles the first provided that cooperative societies (šerkathā-ye taʿāwonī) could be established by groups of individuals for unlimited periods in order to meet the special needs and improve the material and social conditions of their members. Their functions might include one or several of the following: consumption, production, marketing, processing, construction credit, and common services. In Article 11 it was declared that “cooperative societies may be established in accordance with the special regulations agreed upon by their members, and they are not obligated to follow the provisions of the Commercial code with regard to their formation and organization.” Under Article 3 the formation of cooperative federations (etteḥādīya-ye šerkathā-ye taʿāwonī) and a central federation of cooperatives was also stipulated.
Two years after the fall of the Moṣaddeq government in August 1953 new legislation affecting cooperative societies was passed (August 1955) by a joint commission of the two houses of the parliament (Komīsīūn-e moštarak-e majlesayn). It established a permanent council of cooperatives (Šūrā-ye taʿāwon) to administer the cooperatives; its members included the ministers of labor, finance, the interior, and agriculture, as well as the managing directors of the plan organization and the agricultural bank (Art. 8). The significance of this bill was in providing the legal basis for formation of urban and rural cooperatives and cooperative federations until a new law of cooperative societies (Qānūn-e šerkathā-ye taʿāwonī) was passed by the Majles in 1350 Š./1971.
The latter law consists of 25 chapters and 149 articles, setting forth in detail the constitution, provisions, organization, and procedures of cooperative societies (for the text, see Wezārat-e taʿāwon, 1354 Š./1975b). The Ministry of cooperation and rural affairs was charged with general guidance and supervision of cooperative societies throughout the country (Art. 133). Establishment of a supreme council for coordination of cooperatives (Šūrā-ye ʿālī-e hamāhangī-e taʿāwonīhā-ye kešvar) was provided for in Article 133. Different categories of cooperatives were defined: agricultural, rural, fishing, consumer, housing, credit, school, work, artisan and handicraft, small-industry, trade, and professional (Arts. 73-94). These various types can be classified generally as rural and urban cooperatives.
Rural cooperatives grew rather slowly from their emergence in 1318 Š./1939 until 1340 Š./1961; the period of rapid expansion initiated by land-reform programs in the latter year continued until the Revolution of 1357 Š./1978.
The early phase. The first steps in the development of cooperatives in rural areas were taken in 1318 Š./1939, when the Agricultural bank (Bānk-e kešāvarzī) began to encourage formation of rural fund societies (ṣandūqhā-ye taʿāwonī), intended to provide low-interest loans to small landowners, peasant proprietors, and tenants. According to Ann Lambton, “progress in the first few years was slow, and fewer than twenty societies were set up.” By 1337 Š./1958, when the rural fund societies were transformed into rural cooperatives, there were seventy-seven such societies in existence (Lambton, 1969b, p. 46). The distribution and sale of crown lands in early 1331 Š./1952 was accompanied by a pilot project in Varāmīn, where a multipurpose cooperative encompassing twelve villages was set up with technical and financial assistance from the American Point Four program and the Near East Foundation. This experiment, though successful, could not be repeated in all rural areas (Najmabadi, pp. 170-71). Subsequently the Development bank (Bānk-e ʿomrān, established in 1331 Š./1952 with funds provided by the shah and the Point Four program), which was charged with administering the distribution of crown lands, began to establish village cooperatives to provide technical and financial assistance to the peasants and tenants receiving the land (Lambton, 1969b, p. 46; Ram, pp. 5-12). Formation of rural cooperatives was also encouraged under the charters or bylaws of several government agencies. For instance, the law establishing the Rural-development agency (Lāyeḥa-ye eṣlāḥ-e omūr-e ejtemāʿī wa ʿomrān-e dehāt), approved in August 1956, stipulated the formation of rural funds and cooperatives by individual village and district councils (šūrā-ye deh/baḵš). In practice, however, the Agricultural bank was the most active government institution in founding and supporting rural cooperatives. By 1339 Š./1960 there were 639 rural cooperatives with approximately 290,000 members and share capital of 140 million riyals in Persia (Bānk-e kešāvarzī-e Īrān, Gozareš, 1340 Š./1961, pp. 3-10).
Rural cooperatives after land reform. The implementation of the land-reform program thus accelerated the growth and development of rural cooperative societies (Lambton, 1969b, pp. 1-28; Ajami, 1973, pp. 1-12; Hooglund, 1982, pp. 105-10). Under the Land-reform law (Qānūn-e eṣlāḥāt-e arżī) membership in the appropriate village cooperative was a precondition for receiving land (Art. 16 n.). The cooperative was charged by law with general supervision and direction of village agricultural affairs, including upkeep of the qanāt (subterranean aqueduct) and irrigation channels, use of cooperatively owned agricultural machinery, and pest control (Art. 32; see Lambton, 1969b, pp. 292-93).
Sayyed Ḥasan Arsanjānī (q.v.), minister of agriculture and the main architect of land reform, sought to ensure the independence of the peasants by making it possible for them to manage their own affairs through cooperative societies (Ashraf, 1991, pp. 282-83), which were expected to help develop self-reliance. Although in theory a cooperative was to be formed in every village where land was to be transferred to the peasants, in practice that was not possible. Membership in the cooperatives was originally limited to peasants holding ploughlands (nasaqdār) or engaged in agriculture in the area. This provision excluded about 30 percent of the rural population who did not own land or hold cultivation rights (ḵošnešīn); the restriction was therefore removed in early 1350 Š./1971. In the initial phase cooperative societies were set up by the land-reform officials and run under the supervision of the Agricultural credit and rural development bank (Bānk-e eʿtebārāt-e kešāvarzī wa ʿomrān-e rūstāʾī), successor to the Agricultural bank. In 1342 Š./1963 the Central organization for rural cooperatives (CORC, Sāzmān-e markazī-e taʿāwon-e rūstāʾī) was created and took over establishment and supervision of rural cooperatives (Lambton, 1969b, pp. 291-302). CORC was an independent corporation chartered as a joint-stock company and governed under the Commercial code. Its authorized capital was 1 billion riyals, divided into 10,000-riyal shares. The company was run by a general assembly (consisting of shareholders, the minister of agriculture, and the manager of the Agricultural credit bank), which appointed a governing council of five members from several government bodies; it also elected a board of directors, composed of a chairman and two members; and an accountant (for details, see Lambton, 1969b, pp. 298-301). Its main functions were promotion, supervision, training, and administration of local cooperative centers (ḥawza-ye taʿāwon), often through provincial (ostān) and county (šahrestān) federations. The cooperative centers, the grass-roots units, each comprised one to three rural cooperatives directed by a supervisor (sarparast) and an assistant (komak-sarparast), both appointed and paid by CORC. Day-to-day management of each cooperative was in the hands of an executive committee (hayʾat-e modīra) appointed by the general assembly of the members (majmaʿ-e ʿomūmī) for periods of two years. The executive committee elected its chairman (raʾīs) and secretary (dabīr) from among its members and appointed a managing director (modīr-e ʿāmel) to carry out its decisions. The rural cooperative societies in each šahrestān were assisted by CORC in setting up cooperative federations, which were intended to assist in marketing, providing credit, and supplying fertilizer and agricultural machinery (for details, see Mahdawī and Majīdī, pp. 65-72, 113-118).
As the 1962 land-reform program was extended throughout the entire country the number of rural cooperatives, which had reached 960, with 351,973 members, in 1340 Š./1961, began to increase rapidly. A decade later, in 1351 Š./1972, there were 8,361 societies, with approximately 2.06 million members (Sāl-nāma-ye āmār-e kešvar, 1351, p. 480). Although rural cooperatives had originally been designed to serve two to four villages each, they proved to be too weak to be effective, and in 1351 Š./1972 CORC therefore initiated a drastic policy of amalgamation (barnāma-ye edḡām), merging three or four of the existing societies into one. As a result, by the end of 1352 Š./1973 the number of societies had been reduced by 70 percent to 2,750, with about 2.4 million members. Following the mergers typical cooperative membership was about 1,500 peasants from fifteen or sixteen villages (Aresvik, pp. 106-07).
The main activity of rural cooperatives was the provision of small, low-interest loans to members for short terms, generally one year. The loans were designed to help farmers with current production and consumption expenditures. The average amount of a loan, 3,300 riyals in 1342 Š./1963, had increased to 21,000 riyals by 1356 Š./1977 (Sāl-nāma-ye āmārī-e kešvar, 1350, p. 456; Sāl-nāma-ye āmārī-e kešvar, 1360, p. 554). The second most common activity was distribution of fertilizer (a total of 871,000 metric tons in 1355 Š./1976) and the supplying of certain basic consumer items to members through the cooperative stores (which had increased to 5,322 by 1355 Š./1976). The least developed area of activity was the purchase and marketing of agricultural produce (Najmabadi, pp. 182-83). A survey of rural cooperatives in 1354 Š./1975 revealed that, although 93 percent conducted some consumer sales and 90 percent extended loans to members, only 23 percent were active in providing agricultural machinery and other inputs, and only 21 percent had programs to buy the peasants’ surplus production (Sāzmān-e barnāma, 1354 Š./1975, p. 110).
CORC, though initially founded as an independent corporation, gradually came under government control. The law for establishment of the Ministry of land reform and rural cooperation (Qānūn-e taškīl-e wezārat-e eṣlāḥāt-e arżī wa taʿāwon-e rūstāʾī), approved in October 1967, and the law replacing it with the Ministry of cooperatives and rural affairs (M.C.R.A.; Qānūn-e taškīl-e wezārat-e taʿāwon wa omūr-e rūstāhā), approved in February 1971, charged these ministries with supervision, direction, and expansion of rural cooperative societies and their federations.
In quantitative terms considerable progress was made in the development of rural cooperatives after the implementation of land reform. By 1357 Š./1978 2,942 societies, with 3.01 million members and a total capital of 9.3 billion riyals, had been established. In addition, 153 šahrestān federations, with a total membership of 2,922 rural cooperatives and a total capital of 4 billion riyals had been organized (Sāl-nāma-ye āmārī-e kešvar, 1360, pp. 554, 557). In 1355 Š./1976 a central federation for rural cooperatives (Etteḥādīya-ye markazī-e taʿāwon-e rūstāʾī), encompassing the šahrestān federations, was also established. Studies evaluating the performance of the rural cooperatives reveal, however, that most of them lacked adequate financial resources, qualified personnel, and effective management. It was these deficiencies that prevented them from expanding their activities beyond granting loans to supplying new agricultural inputs and marketing produce (for details, see Ashraf, 1978, pp. 143-46; Azkīā, pp. 53-85; Sāzmān-e barnāma, 1975, p. 16; Moʾassasa-ye moṭālaʿāt wa taḥqīqāt-e ejtemāʿī, 1969, pp. 70-84).
Production cooperatives. Agrarian production cooperatives (taʿāwonīhā-ye tawlīd) were established in 1351 Š./1972 under the Production cooperative law (Qānūn-e taʿāwonī nemūdan-e tawlīd wa yak-pāṛča šodan-e arāżī dar ḥawza-ye ʿamal-e šerkathā-ye taʿāwonī) of February 1971, in order to compensate for the disadvantages of small and fragmented landholdings through machinery pools, adoption of communal cropping patterns, joint cultivation, and marketing. In production cooperatives the land was owned by the individual farmers, but farming was carried out in groups based on the traditional bona system (collective organization for production; for details, see Ṣafīnežād, 1974 and review; Ajamī, 1970; Hooglund, 1981). They were established, staffed, and managed by the government, which provided financial support for road construction, irrigation systems, electricity, workshops, stores, and office buildings through the Ministry of cooperatives and rural affairs (Wezārat-e taʿāwon wa omūr-e rūstāhā, 1977, pp. 12-16). By the end of 1356 Š./1977 a total of thirty-seven production cooperatives, with 10,304 peasant members from 233 villages, had been formed. Immediately after the Revolution of 1357 Š./1978 the number of production cooperatives declined to eighteen, with a total membership of 5,000 farmers (Bank Markazi Iran, Annual Report and Balance Sheet 1358, p. 23).
During and after World War II workers and government employees on fixed incomes suffered greatly from a rapid rise in the cost of living, especially food prices. As a step toward improvement of their situation, the government provided legislation and financial assistance to promote establishment of consumer cooperatives for government employees and factory workers. Under the First seven-year development plan law (Barnāma-ye haft-sāla-ye awwal), adopted by the Majles in 1327 Š./1949, these cooperatives were exempted from registration fees and income taxes for a period of five years and were to receive loans out of development funds (Arts. 2, 4). Furthermore, Article 19 of the Labor law (Qānūn-e kār) of 1328 Š./1949 also included special recommendations for the formation of consumer cooperatives in factories and workshops throughout the country. Between 1320 Š./1941 and 1330 Š./1951 a total of nineteen consumer cooperatives serving government employees, factory workers, and the armed forces were formed. Most of them did not continue in operation after 1330 Š./1951, however, mainly because the government discontinued financial support and most members were unfamiliar with the principles on which the cooperatives were based and with the management techniques necessary to their survival. Only six of these cooperatives are still active today. The most successful are those for Ministry of education employees (Šerkat-e taʿāwonī-e maṣraf-e kārmandān-e Wezārat-e farhang) in Tehran, the Češma Gol coal miners (Šerkat-e taʿāwonī-e maṣraf-e kārgarān-e maʿdan-e ḏoḡāl-e sang-e Češma Gol) in Torbat-e Jām, and the armed forces (since 1347 Š./1968 the Sepah consumer cooperative, Šerkat-e taʿāwonī-e maṣraf-e sepah; Ṣadr-al-Ašrāfī, pp. 212-14).
Despite many failures in the initial phase the urban cooperatives began to grow slowly after the passage of the cooperatives bill of 1332 Š./1953. They included a variety of types: credit, production, housing, and consumer cooperatives, which can be divided into two general categories: those serving workers (taʿāwonī-e kārgarī) and those serving other segments of the urban population (taʿāwonī-e šahrī-e ḡayr-e kārgarī). By 1339 Š./1960 there were eighty-seven of the former, with 51,109 members, and 109 of the latter, with 51,850 members (Sāl-nāma-ye āmārī-e kešvar, 1347, p. 7). In Table 18 data on the development of urban cooperatives are given for the period 1339-65 Š./1960-86.
COOPERATIVES SINCE THE REVOLUTION OF 1357 Š./1978
In Articles 3, 43, and 44 of the Constitution of the Islamic Republic (q.v.) the important role of cooperatives in contributing to material well-being, social justice, spiritual advancement, and Islamic brotherhood among the population is stipulated. In Article 43 it is specifically declared that the economic system of the Republic “is to consist of three sectors, state, cooperative, and private, and is to be based on orderly and correct planninġ . . . . The cooperative sector is to include cooperative companies and institutions concerned with production and distribution, established in both the cities and the countryside, in accordance with Islamic criteria.” After the adoption of the Constitution there were various attempts in the Majles to draft a comprehensive law for the cooperative sector, as stipulated under the Constitution, but it was more than a decade before these attempts bore fruit.
Until 1370 Š./1991, however, the development of the cooperatives continued under the terms of the cooperative law of 1350 Š./1971. The number of rural cooperatives increased from 2,942, with some 3 million members in 1357 Š./1978, to 3,110, with more than 4.2 million members, in 1368 Š./1989. These societies also considerably expanded their activities in marketing crops, distribution of fertilizer, and opening cooperative stores (Sāl-nāma-ye āmārī-e kešvar, 1360, p. 554; Sāl-nāma-ye āmārī-e kešvar, 1368, p. 399; Sāzmān-e markazī-e taʿāwon-e rūstāʾī-e Īrān, pp. 8-15). Keith McLachlan (pp. 200-03) has observed that ambivalent official policy toward cooperatives is reflected in the failure to enact legislation permitting direct government grants to encourage greater activity. The position of the Ministry of agriculture has been complicated by its support for new agricultural service centers (marākez-e ḵadamāt-e kešāvarzī), which are absorbing most of its funds and technical staff. In addition, different factions within the government have opposing views on whether the cooperatives should function through local initiatives or be tightly controlled by the state. Finally, the operations of Jehād-e sāzandagī (Reconstruction crusade) in assisting farmers to construct irrigation facilities, form cultivation groups, and repair agricultural machinery compete with or duplicate the efforts of CORC and local cooperatives.
Most urban workers’ cooperatives, as well as some others, have experienced rapid growth in the postrevolutionary period; the former increased from 2,031, with 567,000 members, in 1359 Š./1980 to 5,064, with 1,198,000 members, in 1368 Š./1989, the latter from 2,017, with 1.2 million members, to 10,322, with more than 5 million members, in the same period. Consumer (maṣraf) and supply and distribution (tahīya wa tawzīʿ) cooperatives experienced the most rapid growth rate, perhaps partly because of increasing demand for food and scarce consumer goods (see Table 18).
In 1362 Š./1983 a bill for the cooperative sector of the Persian economy (Ṭarḥ-e qānūnī-e baḵš-e taʿāwonī-e eqteṣād-e eslāmī-e Īrān) was approved by a special commission of the Majles and submitted for review, a major step in promoting and directing cooperatives. After eight years of debate in the Majles and in the Council of guardians (Šūrā-ye negahbān) the bill was resubmitted to the Majles in December 1989 and finally approved by both bodies in 1370 Š./1991. Article 69 provides for establishment of the Ministry of cooperatives (Wezārat-e taʿāwon) to supervise implementation of all laws and regulations governing cooperatives and to provide assistance and coordination in development of this sector. Rural cooperatives are, however, excluded from the provisions of this law and remain under the supervision of the Ministry of agriculture. The Ministry of cooperatives was established on 10 Dey 1370 Š./31 December 1991 (Resālat, 11 Dey 1370 Š./1 January 1972, p. 5). It remains to be seen how it will influence the future development of cooperatives, especially whether they will be able to function through members’ initiatives and self-administration or will be closely controlled by a centralized state agency as in the past.
A. Ajami, Šešdāngī. Pažūheš-ī dar zamīna-ye jāmeʿa-šenāsī-e rūstāʾī, Shiraz, 1349 Š./ 1970.
Idem, “Land Reform and Modernization of the Farming Structure in Iran,” Oxford Agrarian Studies 2, 1973, pp. 1-12.
Idem, “Agrarian Reform, Modernization of Peasants and Agricultural Development in Iran,” in J. W. Jacqz, ed., Iran. Past, Present and Future, New York, 1976, pp. 131-57.
O. Aresvik, The Agricultural Development of Iran, New York, 1976.
A. Ashraf, “The Role of Rural Organizations in Rural Development. The Case of Iran,” in Inayatullah, ed., Rural Organization and Rural Development. Some Asian Experiences, Kuala Lumpur, 1978, pp. 115-60.
Idem, “State and Agrarian Relations before and after the Iranian Revolution, 1960-1990,” in F. Kazemi and J. Waterbury, eds., Peasants and Politics in the Modern Middle East, Miami, 1991, pp. 277-311.
M. Azkīā, ed., Šerkathā-ye taʿāwonī-e rūstāʾī dar šeš manṭaqa, Moʾassasa-ye moṭālaʿāt wa taḥqīqāt-e ejtemāʿī-e Dānešgāh-e Tehrān (stenciled), Tehran, 1348 Š./1969.
Bānk-e kešāvarzī-e Īrān, Gozāreš-e sālīāna, Tehran, 1342-45 Š./1963-66.
Idem, Barrasī-e taḥawwolāt-a eqteṣādī-e kešvar baʿd az enqelāb, Tehran, 1362 Š./1983.
E. J. Hooglund, “Rural Socio-economic Organization in Transition. The Case of Iran’s Bonehs,” in M. E. Bonine and N. Keddie, eds., Continuity and Change in Modern Iran, New York, 1981, pp. 161-77.
Idem, Land and Revolution in Iran, 1960-1980, Austin, Tex., 1982.
A. K. S. Lambton, “Land Reform and Rural Co-operative Societies in Persia,” Royal Central Asian Journal 56, 1969a, pp. 142-55.
Idem, The Persian Land Reform, 1962-1966, London, 1969b.
K. McLachlan, The Neglected Garden. The Politics and Ecology of Agriculture in Iran, London, 1988.
M. Mahdawī and H. Majīdī, eds., Amūzeš-e omūr-e taʿāwon, Tehran, 1363 Š./1984.
Moʾassasa-ye moṭālaʿāt wa taḥqīqāt-e ejtemāʿī, Barrasī-e eqteṣādī wa ejtemāʿī-e rūstāhā-ye Torbat-e Jām, 1348 Š./1969.
A. Najmabadi, Land Reform and Social Changes in Iran, Salt Lake City, Utah, 1987.
H. Ram, Development Bank’s Programs for Rural Cooperatives, Tehran, 1964.
Ṣadr-al-Ašrāfī, Eqteṣād-e kešavarzī wa taʿāwon, Tehran, 1363 Š./1984.
J. Ṣafī-nežād, Bona, Tehran, 1353 Š./1974; review by H. Sāʿedlū, in Rāhnemā-ye ketāb 18/1-6, 1354 Š./1975, pp. 61-72, 337-486.
Idem, “Taʿāwonīhā-ye tawlīd-e zerāʿatī-e sonnatī dar Īrān,” Nāma-ye ʿolūm-e ejtemāʿī 2/2, 1355 Š./1976, pp. 165-79.
Sāzmān-e barnāma, Barrasī-e moqaddamātī-e šerkathā-ye taʿāwonī-e rūstāʾī, Tehran, 1354 Š./1975.
Idem, Barrasī-e moqaddamātī-e šerkathā-ye taʿāwonī-e rūstāʾī baʿd az enqelāb-e eslāmī, Tehran, 1365 Š./1986.
Sāzmān-e markazī-e taʿāwon-e kešvar, Rāhnemā-ye āmūzgārān-e taʿāwon, Tehran, 1347 Š./1968.
Idem, Šerkathā-ye taʿāwonī. Ważʿ-e feʿlī wa āyanda-ye ānhā, Tehran, 1347 Š./1968.
Sāzmān-e markazī-e taʿāwon-e rūstaāʾī-e Īrān, Negareš-ī bar faʿʿālīyat-e taʿāwon-e rūstāʾī baʿd az enqelāb-e eslāmī, Tehran, 1365 Š./1986.
J. Wadīʿī, “Moqaddama-ī bar taʿāwonīhā-ye sonnatī dar jāmeʿa-ye īrānī,” in M. Rowšan, ed., Sevvomīn kongera-ye taḥqīqāt-e īrānī II, Tehran, 1353 Š./1974, pp. 544-45.
Wezārat-e taʿāwon wa omūr-e rūstāhā, Barrasī-e ważʿ-e ejtemāʿī wa eqteṣādī-e aʿżā-ye šerkathā-ye taʿāwonī-e rūstāʾī dar Kermān, Tehran, 1354 Š./1975a.
Idem, Qānūn-e šerkathā-ye taʿāwonī, Tehran, 1354 Š./1975b.
Idem, Barrasī-e ważʿ-a mālī wa bedehī-e kešāvarzān-e ʿożw-e šerkathā-ye taʿāwonī-e rūstāʾī dar panj nāḥīa, Tehran, 1355 Š./1976.
Idem, Barrasī-e faʿʿālīyathā-ye šerkathā-ye sehāmī-e zerāʿī wa šerkathā-ye taʿāwonī-e tawlīd, Tehran, 1356 Š./1977.
Table 18. Development of Urban Cooperatives 1339-65 Š./1960-86
(Amir I. Ajami)
Originally Published: December 15, 1993
Last Updated: October 28, 2011
This article is available in print.
Vol. VI, Fasc. 3, pp. 253-258