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Land Reform Policies in Iran

Author(s): Mohammad G. Majd


Source: American Journal of Agricultural Economics, Vol. 69, No. 4 (Nov., 1987), pp. 843-848
Published by: Oxford University Press on behalf of the Agricultural & Applied Economics
Association
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Land

Reform

Policies

in

Iran

MohammadG. Majd
Land reform (1962-71), contraryto a widespreadview, gave land on highly favorableterms
to all of Iran's 1.8 million tenantcultivatorsand benefited74% of all farmersand 67% of
ruralhouseholds. It thus radicallychanged landownershipand resultedin a far-reaching
socioeconomic tranformation.It did not, however, result in political stability. This article
identifies some of the sources of errorin the literatureon land reform in Iran and shows that
official land reform data are correct and consistent with numerouscensus results.
Key words: Iran, landless households, land reform, owner-occupiers,tenants, transferof
ownership.

The view that land reformin Iranwas of a limited


naturehas been widely prevalentin the literature
(Afshar;de Janvry;Hooglund;Katouzian;Keddie
1972, 1981; Looney; ParvinandZamani;Rouleau;
Suzuki;Yeganeh). In assessing the most important
land reforms of this century, de Janvry (p. 387)
statedthat 19%of the peasantryand 31% of farmland in Iran were included in the reform sector.
Consequently, Iranianland reform was classified
as anti-feudal:designed to eradicatefeudalism, to
establish capitalism in the non-reformsector, and
to promote political stability.
In contrastto these views, this articleshows that
land reformfundamentallychangedlandownership
in Iran, transforminga system dominatedby tenancy to one consisting of owner-occupiedfarms,
and fully succeeded in giving land to all of Iran's
tenant farmers. Numerous studies have indicated
that capitalismin ruralIranhas deep roots extending into the previous century. Consequently,land
reformcould not be consideredto have established
capitalism. Moreover, land reformand subsequent
government policy were hardly conducive to a
strengtheningof capitalistinstitutions.Landreform
did not promote political stability in Iran. A monarchical system that had lasted for twenty-five
centurieswas overthrownbarelysix years afterthe
completion of a majorland reform.

MohammadG. Majd is an assistantprofessorof economics at Bloomsburg University. He was an assistantprofessorof economics at Gettysburg College at the time this study was completed.
The authorwould like to thank Daniel G. Sisler, Vahid F. Nowshirvani, and Michael J. Schultheis for comments on an earlier version of
this paperand two anonymousJournal referees for helpful suggestions.

Landownership and Tenure before Land


Reform
The numberof villages in Iranhas been variously
given as ranging from 49,000 to 72,000. At the
time of land reform, Iranhad 60,520 villages and
22,933 "farms" (mazra-eh). Of the 60,520 villages, 6,236 were withoutagriculture,in a state of
abandonment,or served as seasonalresidencesfor
migratingtribes, and 2,083 consisted solely of orchards and vineyards. The remaining52,201 villages, of which 1,232 were "mechanized" (Iran
Statistical Center, hereafterISC, 1975, pp. 24445), could be classified as agricultural.These findings were confirmedby the 1974 agriculturalcensus, which also showed that 72% of the "farms"
were includedin village land and that the vast majority were uninhabited (Rural and Agricultural
Statistics of Iran, hereafterRASI, p. 159).
Concerningthe ownershipof the agriculturalvillages, land reform data indicatedthat the church
held 6,885 endowed villages (Denman, p. 273),
the governmentowned 1,535 villages and partsof
245 others (ISC 1975, p. 244), and the crown had
owned 2,167 villages and farms (Zonis, p. 55). In
short, these institutionsowned about 20% of the
villages. In addition, 2,250 private landowners
owned morethanone village (Ajami,p. 120). These
individualsowned the equivalentof 11,740 villages
(22%).1 Some 20% were owned by peasantcultiUnder the first phase of land reform, 3,990 entire villages and parts
of 11,003 other villages were purchasedfrom these individuals (ISC
1975, p. 244). Assuming that they had owned one-half of the 11,003
villages (Ajami), it follows that the equivalent of 9,490 villages was
purchasedfrom large landowners.The law also enabledeach landowner
to retain one village. Consequently, these individuals had owned the
equivalentof 11,740 villages.

Copyright 1987 AmericanAgriculturalEconomics Association

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844 November 1987

Amer. J. Agr. Econ.

vators (Pahlavi, p. 201), and the remaining38%


were owned by 320,000 small landowners.
The inaugural1960 agriculturalcensus enumerated 3.218 millionruralhouseholds,of which 2.442
million were classified as agricultural(bahre-bardar) and 776,700 as nonagricultural.2The census
also indicatedthat there were 1.877 million holdings with land(tenancyandowner-occupied)(table
1) and 1.284 million landless households which
neitherowned norrentedland. Of the 1.877 million
holdings, 1.129 million(60%)wererentedor sharecropped; 124,209 (7%) rented as well as owned
land; and 624,283 (33%) were owner occupied.
The census resultsindicatedthat 1.25 million units
rented and 748,000 units owned land (including
124,000 part-owner,part-tentantfarmers in both
figures).
The 1960 agriculturalcensus, however, overstatedthe country'sruralpopulation,especially the
number of landless households, and underestimated the numberof holdings with land and the
country's agriculturalarea; it has, therefore, been
the source of much confusion. The census defined
as ruralsettlementsall those with less than 10,000
populationin 1956; that is, 75% of the total population and all but twenty towns were classified as
rural. A revised estimate of rural population in
1960 identified2.72 million households,excluding
the nomadic tribes, and indicatedthat498,000 urban households had been misclassified as rural
landless (RASI, p. 175).
The 1960 census also frequentlyclassified small
farmersperformingwage laboras landless. Khamsi
(pp. 34-37) indicatedthat many tenantshad been
misclassifiedby being includedin the ranksof the
landless. The 1966 populationcensus indicatedthat
this errorwas about 600,000. It enumerated2.346
million cultivators and 118,000 fruit growers,
yielding a total of 2.464 million (ISC 1972, p.
censusenumerated2.479
266). The 1974agricultural
million holdings with land (table 1). Given 2.442
million agriculturalhouseholdsin 1960, 2.464 million farmersin 1966, and 2.479 million holdings
with land in 1974, it is a safe assumptionthatthere
were about2.4 million holdingswith landin 1960.3
This was the figure given by the CentralBank of
Iran (Azkia, p. 60). The number had remained
unchanged since land reform legally barredland

recipients from the sale of their land for fifteen


years.
Landreformsought to transferthe ownershipof
land to the tenantcultivators.Subtracting624,000
owner-occupiers from 2.442 million agricultural
householdsyields 1.818 million tenants, including
124,000 part-tenants,eligible to receive land. That
is, 74% of all farmersand 67% of ruralhouseholds
were potentialbeneficiaries.Moreover,the number
of landless ruralhouseholds in 1960 was at most
400,000. This estimate is consistentwith the 1966
populationcensus finding of 339,000 landless agriculturalwage earners(ISC 1972, p. 266). Having
underestimatedthe numberof holdings with land,
the census underestimatedthe country's agricultural area. In addition, some of the apparent44%
expansion in farmlandarea (table 1) consisted of
landunderfallow thathadbeen misclassifiedunder
the census (Khamsi, p. 38).

The Three Phases of Land Reform


Iranian land reform (1962-71) was launched by
royal decree and implementedin three phases. Its
aim was to transferthe ownership of land to the
cultivators. As was shown above, slightly more
than 1.8 million farmerswere eligible. Official results fromeach phase, however, showed2.214 million land recipients under the three phases (ISC
1974, p. 298; ISC 1975, pp. 244-45). The breakdownof recipientswas as follows:phase1:800,000;4
phase 2: 214,000; and phase 3: 1.2 million peasants. When the numberof beneficiaries is added
to 794,000 owner-occupierswhose legal statushad
been determined under phase 2 (Moghadam, p.
162; ISC 1975, p. 244), the resulting 3 million
units far exceeded the 2.479 million holdings existing in 1974 (table 1). The discrepancyis due to
multiple counting as the result of including peasants in more than one phase of land reform (Salmanzadehand Jones 1979). Thatdetailed study of
land reformin 169 villages found that one-thirdof
landrecipientsunderphase3 also hadreceivedland
under phase 1.
Assuming the same for the 1.2 million beneficiaries of phase 3, it follows there were 800,000
first-timerecipientsunderphase 3. When addedto
the recipientsof the previousphases, the resulting
total of 1.814 million is entirely consistent with

2 Based on the
1956 populationcensus, a stratifiedsample of 1,787
villages was selected and in each sample village, a stratifiedsample of
households was selected.
3 The apparent32% increase in the numberof landholdings(table 1)
4 The 800,000 figureconsistedof 709,000 recipientsof privatelyowned
between 1960 and 1974 is not consistent with a 6.9% decline in agriculturalemploymentand an annualgrowthrateof .7% in the rurallabor land and 91,000 recipients of government-ownedland. The figure of
force (RASI, pp. 175-77). Although the theoretical possibility of a
753,000 given by the CentralBank (Azkia, p. 59) appearsto consist of
simultaneousrise in the numberof farms and a decline in agricultural the 709,000 already cited and 42,203 farmerswho benefited from the
employment exists (Berry), it is dependenton giving land to landless sale of royal estates between 1951 and 1961 (Ajami, p. 122). These
laborers.However, landreformin Irangave land to the existing tenants. should not be included among the beneficiariesof the 1962 law.

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Land Reform in Iran 845

Majd

Table 1.

Pattern of Landholding in 1960 and 1974


1960

Size of
Holding
(Hectares)
less than 1
1 to less than 2
2 to less than 5
5 to less than 10
10 to less than 50
50 to less than 100
100 and more
Total

1974

Numberof
Holdings

Area in
Hectares

Average
Size in
Hectares

492,306
256,496
474,457
340,037
301,471
8,446
4,086
1,877,299

198,939
371,846
1,553,906
2,413,042
5,263,713
563,805
991,003
11,356,254

.40
1.45
3.27
7.09
17.46
66.75
242.50
6.04

Numberof
Holdings

Area in
Hectares

Average
Size in
Hectares

734,274
322,193
541,592
427,934
428,074
16,269
9,553
2,479,889

259,887
443,675
1,732,868
2,953,447
7,500,741
1,073,697
2,452,906
16,417,221

.35
1.38
3.20
6.90
17.52
66.00
256.77
6.62

Source: First NationalCensus of Agriculture,October 1960, p. 33. Results of the Second Stage of the 1974 AgriculturalCensus,
p. 15.

the census results and shows that all those eligible


to receive land did so.
Village-level and regional studies have confirmedthe wide scope of landreform.Salmanzadeh
and Jones (1979) found that at least 97% of the
6,927 eligible peasants residing in 169 villages
studied had received land. Anotherstudy (Suzuki)
also indicated that land reform in the province of
Gilan was comprehensive.5
Compensation under Land Reform
Discussion of compensationof landownersaffected
by land reform provides additional insight about
land reform in Iran. In phase 1, maximum landownershipwas restrictedto one village per person;
and the surpluswas sold to the government,which
transferredthe ownership of the affected villages
to the cultivating tenants on the basis of the area
cultivatedby each tenantpriorto land reform.The
purchase price was determinedby the annual tax
paid by the owners. However, since landowners
frequently evaded taxes and the rates were infrequently revised, they were heavily penalized
(Amuzegar, pp. 219-20; Moghadam,p. 161).
The 9,490 villages purchasedby the goverment
under phase I were valued at $136.4 million ($1
= 76.5 rials). Thus, each village on average was
valuedat $14,370, andeach ownerreceived$60,620
amortizedover fifteenyears at a 6%rateof interest.
The first installmentpaid was $41.0 million; this
was $4,320 per village and $18,200 per landowner
(ISC 1975, p. 244). Peasantswere assessed $150
million over fifteen years ($136.4 million payable
to the landowners,plusa 10%administrative
charge),
5 Suzuki (p. 41) estimated that 1.918 million peasants received land
under land reform. Nevertheless, he concluded that "more than 40 percent of peasants were still under landlord-peasantsystem."

which is $210 per beneficiarypayable over fifteen


years. Peasants receiving government land were,
on average, assessed $194 per family (ISC 1975,
p. 244). Moreover, if peasantsfell behind in their
payments, the CentralBank simply fundedthe difference (World Bank, p. 68).
In phase 2 (1963-67), each landownerwas given
one of five options on land not taken underphase
1: (1) sell the land and water to the tenants by
mutualagreementor on termsequalto thatof phase
1; (2) divide the land and water with tenants on
the basis of crop shares, providedthe tenantsconsented;(3) purchasethe peasants'cultivationrights,
provided the peasants consented and the owner's
holding was below a certain limit (20-150 hectares, depending on the region); (4) rent the land
to the cultivatorsfor thirty years on the basis of
rent paid duringthe precedingthreeyears and subject to revision every five years; (5) set up a jointstock companywith the tenants.In practice,option
5 continuedsharecroppingbut establishedthe tenants' legal rights and control. The law stipulated
that tenants on endowed land held by the church
be given thirty-yearor ninety-nine-yearleases, depending on the type of endowment.
Official results (ISC 1974, p. 298) show that
311,531 landowners, 1,552,178 tenantson private
land, and 173,104 tenants on endowed land were
affected by phase 2. However, 35% of the tenants
affected had been included in phase 1, and many
tenants on endowed land also cultivated private
land and were thus included in provision (4) of
phase 2 (Salmanzadehand Jones 1979, p. 119).
Only 3,202 landowners(1%) sold land to 57,261
tenants (3.8%) on mutuallyacceptableterms. Provisions (2) and (3) were potentially the most advantageousto the landowners.Divisionon the basis
of crop sharesenabledthem to maintainabout25%
of their property.However, these provisions were
subject to the consent of the peasants;and, given

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846 November 1987

Amer. J. Agr. Econ.

the political climate that had resulted from years


of governmentpublicityagainstlandownersandthe
high expectations aroused, peasants were understandablyreluctantto sell land to or to divide land
with the owner. Only 13,374 peasants(.9%) agreed
to sell to 8,989 landowners(2.9%); 25,359 landowners (8.1%) divided land with 157,598 peasants
(10.1%); 232,366 owners (74.6%) leased land to
1,243,961 tenants (80.1%); and 41,615 owners
(13.3%) formed joint-stock ventures with 81,292
tenants (5.2%). In addition, 173,104 tenants on
churchpropertywere given leases averaging84.7
years. Last, the legal status of 793,871 owneroccupiers, including 124,209 part-owners, parttenants, and 34,348 landownerswho divided land
with or purchasedpeasantrights, was determined.
Although 74.6% of landownersselected option
(4) andleased land, the termswere highly favorable
to the tenants since they had withheld rents for
some years and were favoredby inflation.The real
choice for landownerswas to forfeit ownershipfor
a nominal price or to accept a token rent while
maintainingnominalownership.It is not surprising
that the latterwas preferred.
Phase 3 (1969-71) of landreformstipulatedthat
all land leased in phase 2 or underjoint-stockventuresbe sold to or divided with the tenants.In May
1971, legislation known as the Law of the Sale of
PublicEndowments(SalmanzadehandJones 1979,
p. 122) providedfor the sale of land owned by the
churchand subjectto ninety-nineyear lease to the
tenants. Land reformdata show that 35,406 landowners divided land with 106,318 peasants, and
that 322,318 owners sold to 1,094,269 peasants
(ISC 1975, p. 246), yielding 1,200,587 land recipients under phase 3. The price was equivalent
to twelve years of rent, as determinedunderphase
2 (Azkia, p. 59). It representeda transferof ownership on highly favorable terms to the peasants
(Mahdavy, p. 65).

Landownership After Land Reform


The 1962 landreformlaw exemptedpeasant-owned
holdings and mechanized land from distribution;
that is, land workedby machineryand wage labor.
Subsequentlegislation providedfor the division of
land between landownersand tenantsbased on the
landowner'scropshare.No official datawere given
on the amountof land kept by the owners and thus
excluded from the reform sector. However, there
is evidence that owners retained at most 10% to
15% of the land, with the rest transferredto the
cultivating tenants.
As noted, 20% of the land was owned by peasants before land reform, another20% was owned

by the threeinstitutions,and about 18%of the land


was transferredto the peasantsunderphase 1. Consequently, a little more than 40% of the total agriculturallandwas eligible for division betweenthe
owners and the peasants. Moreover, the limited
extent of mechanization in 1960 was noted by
Nowshirvani (1982, pp. 105-9), and his findings
are supportedby land reform figures which show
that 1,232 villages (2.4%) were mechanized and
thus excluded form distribution.
The landowner'sshare in 1960 was on average
26% of gross output(Azimi, p. 91). Consequently,
at most 10% to 15% of agriculturalland was retained by landownersand at least 85% of agriculturallandwas includedin thereformsector,including
land owned by peasantsbefore land reform. Under
land reform, 69,754 landowners(22%) purchased
land from or divided land with 277,290 peasants
(11% of holdingswith land). The 1974 agricultural
census revealedthat90.6% of agriculturallandand
98.2% of all holdingswere owneroperated(RASI,
p. 185).
The exclusion underlandreformof families who
neither rented nor owned land has been widely
criticized. As noted above, the numberof landless
households was far smaller than previously believed. Moreover, even with their exclusion, average farmsize in 1974 was 6.6 hectares,with only
37% irrigatedundersemiaridconditions(RASI, p.
185). The real solution involved creatingnonagriculturalemploymentopportunities.

Land Reform and Capitalism


Economic historianshave shown thatcapitalismin
rural Iran prior to land reform had old and wellestablished roots. The prevalence of widespread
monetaryexchange in ruralareas;the rapidexpansion of cash crops; the progressive integrationof
Iranianagriculturein the nationaland, ultimately,
the internationaleconomy during the nineteenth
century;the formalabolitionof benefice landholding in 1907;andthe rapidexpansionin the purchase
of rural land by urban capitalists and merchants
have been amply documented(Nowshirvani 1981,
Keddie 1972, Issawi, Olson, Yeganeh). Khamsi
showed that capitalism in rural Iran was well-established prior to land reform. Tenants were not
bound by custom to land (Safinejad,pp. 55-60),
and the use of wage labor by small farmers and
tenantspriorto landreformwas widespread(Azimi,
pp. 91-92).
The implementationof land reform and subsequent governmentpolicy did not enhance capitalism in agriculture. The widespread de facto
confiscations weakened the institution of private

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Land Reform in Iran 847

Majd

propertyin ruralareas. Post-land-reformpolicy resulted in much greatergovernmentinvolvementin


the economic and political life of rural Iran (Yeganeh, p. 77). In 1973, 3.5% of cultivated land
was under direct or indirect government control
(Salmanzadeh and Jones 1981, pp 203-4). This
had grown to 15%by 1978 (Afshar, p. 1100), and
plannersintendedto greatlyexpandthe areaunder
state management.

Concluding Comments
Landreformsuccessfullytransferredthe ownership
of land cultivatedby the tenantsto the tenantsand
thus radicallytransformedthe natureand structure
of landownershipin Iran. It destroyedthe political
and economic power of the landowningclass. The
massive transferof wealth from landlordsto peasants took place on highly advantageousterms to
the peasants. This article has shown that official
land reform data are correct and consistent with
numerouscensus results. The majorsourceof error
in the literatureconcerning the nature and extent
of land reform in Iran has been the uncertainty
about the numberand composition of ruralhouseholds beforelandreformandthe numberof villages
before and after land reform. Another source of
confusion was the multiplecountingof peasantsin
more than one phase of land reform. Iranianrural
and land reform statistics indicatethat developing
country data should be handled with caution and
that, since useful results depend on the quality of
the data, there is a need for familiarity with the
statisticaldefinitionsunderlyingthe data.
De Janvryused his typologyto identifythe needed
characterof future reforms, given the actual state
of agrarianstructure.At least for Iran, the classificationis in errorandthe paradigmunsatisfactory.
Economistshave dwelled on the similaritesamong
developingcountries.However,thesecountriesoften
do not behave uniformly, and there is a need to
identify variationsas well as similaritiesin history
and in economic structureand policies.
[ReceivedJanuary 1986; final revision
received January 1987.]
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