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
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
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.
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
Iranian Formal Cooperatives in Pre-Revolution Era
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
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.
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:
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
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
conduct scientific and technical guidance for establishment and
management of producer, credit and rural consumer cooperatives
procure financial assistance by both Iran and US within the framework
of predicted budget and drawn up agreements on implementation of
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.
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.
cooperative institutes from European countries offered scholarships to
Iranian to study abroad and dispatched cooperative specialists to Iran for technical helps.
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
number of set-up cooperatives, including rural cooperative funds and
consumer cooperatives, barely reached one hundred societies up to 1951.
1953, the bill on the first Cooperative Act of Iran was submitted to
the parliament. It was inspired by cooperative laws of other countries.
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.
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)
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
of Cooperative societies and unions associated to National Central
Cooperative Organization up to February 1979, the beginning of Islamic
Revolution, was as follows:
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)
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
of cooperative principles and training supervisory board for directing
members of cooperative societies in rural areas.
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.
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
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
cooperatives came into existence after land distribution operation for
integration of national lands, the law of which was approved in 1970.
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.
of rural producer cooperatives was 39 including 258 villages and farms
with 11,200 land owners and total surrounded surface area of 99,546
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.
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.
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.
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).
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