TORBAT-E HEYDARIEH, Iran (AFP) - A dozen women dressed in colorful chadors crouch in an arid field in eastern Iran picking long lines of delicate light blue crocuses, the source of saffron, the world's most expensive spice.

It is from such humble beginnings in Iran that a colossal 96 percent of the world's saffron production is now emerging, eventually landing on consumers' tables across the world to add color and flavor to food.

But despite Iran's status as the undisputed heavyweight champion of the saffron world, it has yet to realize the full economic potential of the 3,000 year-old industry and faces challenges to hold on to its rampant market share.

And 2006 has so far been a difficult year for Iran's saffron producers. A lack of rain has meant there are fewer flowers than usual and the stigmas are shorter, reducing the yield of the crop.

At the nearby market in Torbat-e Heydarieh, a dusty town 175 kilometers (109 miles) south of the eastern city of Mashhad, the flowers are laid out in piles on tarpaulins and buyers haggle agitatedly over prices driven up by short supply.

"Because of the drought each kilo (2.2 pounds) of flowers is yielding nine grams (of Saffron stigmas) instead of the usual 13 (0.3 ounces instead of 0.5)," complains Ahmad Nikouie as he crushes a fresh saffron thread in his yellow-stained hands.

New sacks of flowers continually arrive fresh from the field. They are laid out at the market stalls and carefully picked over by buyers, with the price changing minute-by-minute depending on supply.

The buyers will then extract from the flower the valuable stigmas -- which are not just attractive but also contain anti-cancer and anti-depression agents -- and then quickly dry them for almost a month before selling them on.

The tense tumult of the market in the region's saffron industry hub underlines the economic importance of saffron to Iran. In this area alone, some 800,000 people are involved in the two-month autumn harvest season.

On the surface the industry is booming. Ten years ago a mere 32 tons of saffron was exported from Iran while last year 200 tons went abroad out of a total output of 230 tons, bringing in 100 million dollars worth of revenue.

Yet saffron could be doing more for the local economy here.

Much of Iran's saffron is still shipped in bulk to countries like the United Arab Emirates and Spain, which then reap most of the economic benefits by doing the value-added packaging themselves.

"If we sold in packaging the Europeans would make less of a profit," said Mohammad Hossein Meshkani, head of Iran's saffron cooperatives, as he surveys the harvest season in full swing beneath clear autumn skies. "If we stop selling in bulk we can make a profit here and export it. But there should be a national will for it. It is not something that can only come from me."

But in the unlikely surroundings of an industrial estate on the outskirts of Mashhad, an example is emerging for Iran over how best to exploit the most traditional of its crops.

Here, Ali Shariati-Moghaddam has developed a world-class saffron factory that looks after everything from the extraction of the stigmas from the flowers to the packaging itself.

His 14-year-old enterprise, whose workers are almost exclusively female, now exports 25 tons of saffron per year direct into supermarkets in Europe and elsewhere, in special packaging directed at the international markets.

On the shop floor, where dozens of women in full headscarves are at work sifting through hundreds of flowers, he says: "Our aim was to make a root change in presenting saffron quality with a new method. "Fifteen years ago this was not a big Iranian product as it was being presented badly. I concluded that there was the new path -- packaging."

Shariati-Moghaddam now exports his saffron in a multitude of different packages targeting specific international markets: from tiny thimbles to large gift boxes worth tens of dollars.

But he is also conscious that presentation is not everything and the reputation of Iran's saffron rests on its quality, as countries like Greece, Italy, and Spain ramp up their own domestic production.

His firm Novin Saffron has its own laboratory where the crucial factors that determine the quality of saffron -- scent, purity, color and humidity -- are scientifically tested.

"We are concerned about poor quality saffron products being sold in the name of Iran," he said. "What worries us even more are consumers who just want to buy cheap saffron. Unfortunately this is a relatively new and delicate commodity and consumers do not know what to expect."

While Shariati-Moghaddam has developed a plant where the full economic value of saffron can be realized, most of Iran's other producers are not so lucky and merely ship in bulk to intermediaries, narrowing their economic margins.

"If I could have the power to export my produce myself I can assure you the Iranian product quality would be seen as it is, not through intermediaries. I want government help," said Gholam Hossein Rastegahzadeh, a local landowner and saffron grower.

A further challenge lurks one hundred kilometers (62 miles) to the east in Afghanistan where farmers have started to grow saffron from smuggled Iranian seeds instead of opium, taking advantage of better water supplies than in Iran.

"At the moment it is not a threat but in the future, if we do not make our job more precise it will turn into a threat. Labor there is much cheaper, if they start farming more and more it could be a threat," said Meshkani.

Meshkani called on the government to help farmers to export their own products by handing cooperatives loans that can help them create proper processing and packaging plants. "Ninety-six percent of the world's saffron is produced by Iran. We have to keep it and have the will from the first link in the chain all the way up. This is part of our national identity."