Traditional Cooperatives 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 Iranian commercial code 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 the Iranian commercial code of 1932.

After the 1979 Revolution of Iran, in principle 44 and 43 of the country's Constitution, cooperatives have been recognized as one of the three main pillars of the Iranian economy. 

Article 44 of the Constitution of the Islamic Republic of Iran states that “the economic system of the Islamic Republic of Iran shall be based on government, cooperative and private sectors, with proper and sound planning”. 

Also, Article 43 of the Constitution describes the functions of cooperatives as follows:

“Ensuring conditions and opportunities of employment for everyone, with a view to attaining full employment; placing the means of work at the disposal of everyone who is able to work but lacks the means, in the form of cooperatives, through granting interest-free loans or recourse to any other legitimate means that neither results in the concentration or circulation of wealth in the hands of a few individuals or groups, nor turns the government into a major absolute employer. These steps must be taken with due regard for the requirements governing the general economic planning of the country at each stage of its growth”.

The development of Iran's cooperative sector over time is as follows: