By Fredrik Dahl
TEHRAN, Nov 30 (Reuters) - A severe drought has caused this year's crop of saffron to fall sharply in Iran, which dominates the global market, sending the price of what is reputedly the world's most expensive spice even higher.
Mehdi Ghazanfari, president of the Iran Trade Promotion Organisation (ITPO), said one kilogram of the fragrant red spice derived from the stigmas of purple crocus flowers now costs $3,000 compared with about $2,000-2,200 a year ago.
He told Reuters that Iran's saffron output may fall below 100 tonnes in 2008, less than half the level of 235 tonnes reached three years ago, which was the decade's best season.
The Islamic Republic says it accounts for more than 90 percent of the world's supply of saffron, a popular ingredient in rice dishes and other food in Iran and also used in cuisines in many other countries, often giving a distinctive yellow hue.
"Unfortunately the level of production has decreased," Ghazanfari, who is also a deputy commerce minister, said in an interview in his Tehran office on Sunday. "Some people estimate it (2008 output) to be 80 tonnes."
His comments were echoed by Ali Shariati-Moghaddam, managing director of exporter Novin Saffron, who also blamed the lower harvest on cold weather the past winter. He said Iran exported saffron to more than 40 countries.
"Although picking and harvesting in some regions is not finished yet, it seems in different regions we have a decrease of between 10 and 90 percent in production," he told Reuters Television 10 days ago in a saffron producing region in north- eastern Iran.
"SAVE SAFFRON"
Earning Iran $200-300 million a year, the saffron sector's importance is dwarfed by the oil industry, which pulled in about $70 billion in export income in the 2007-08 Iranian year.
Some 100,000 people are nevertheless directly or indirectly involved in farming the spice, Ghazanfari said, making the 3,000-year-old industry an important employer in some areas.
The Iran News daily, in an editorial headlined "Save Saffron", said production of the "red gold" had fallen by 40 percent in 2008 and that the price had nearly doubled.
"Conflicting reports are swirling of a halt in Iran's saffron exports to world markets," it said. "Certain officials have been quick to dismiss rumours of any stoppage in saffron exports, saying they have just declined due to high prices."
Ghazanfari still voiced optimism about the long-term future for saffron and the possibility of finding new markets, saying it could also have medical uses, for example in reducing stress.
"Iranian saffron not only tastes very good, but it also ... is very good for the health of people," he said.
Iran News said much of Iran's saffron was still shipped in bulk to nearby the United Arab Emirates and Spain, "which then reap most of the economic benefits by doing the value added packaging themselves."
Ghazanfari said Iranian companies were being encouraged to increasingly package saffron in the country to ensure high quality and that "value added is accumulated in Iran".
(Additional reporting by Reuters Television; Editing by Richard Hubbard)