It's the world's most expensive spice, so thankfully you don't need to use a lot of it to make a big difference

This week, I've been dipping my spoon in a tiny pot of gold at the end of the culinary rainbow, scattering fiery filaments of glorious, warming, pungent saffron not quite with abandon – it's too precious for that – but with delicious pleasure. I've stirred it into rice, sprinkled it into custards, kneaded it into bread, transforming humble ingredients into edible sunshine.

Saffron's name comes from the Arabic za'faran, which means yellow, and it's made from the fiery red stigma of the purple crocus, Crocus sativus. It's the most expensive of all spices – often more costly per gram than gold – and when you know how labour-intensive it is to produce, you'll see why. It can be picked only by hand, early in the morning before the sun gets too hot. Three precious, delicate stamens are removed from each flower before they're carefully dried and packed. It takes around 80,000 flowers to make 450g of this ancient spice.

Saffron first grew in western Asia. The Moguls took it from Persia to India, and it has been cultivated in Kashmir since the third century AD. By the 10th century, Arabs were growing it in Spain, where some of the world's finest saffron is still produced. In the 13th century, crusaders returned from Asia Minor with crocus corms and began growing it in Italy, France and Germany. The story goes that a pilgrim smuggled a corm back to England in the 14th century hidden in a hollow staff. Within a couple of centuries, saffron meadows spread in a precious, purple carpet across Norfolk, Suffolk and Essex, where Market Walden even changed its name to Saffron Walden to mark the influence of King Crocus.

But in some ways East Anglian "crokers", as the crocus growers were known, are parvenus. Here in the West Country, we've been going for gold a lot longer. We exchanged tin for saffron with Phoenician traders and crocus meadows existed around Bude until the 19th century; West Country cooks turned the magical stamens into sunny loaves and cakes. Historically, we could literally count saffron as a local ingredient; traditionally, we still do.

So does half the world, though. These fabulous filaments have stained their way across some of the world's most memorable dishes – bouillabaisse from the south of France, Catalan zarzuela, Spanish paella, risotto Milanese, Persian pilaffs and Indian biryanis, pilaus and milky puddings are all tinged with the crocus's gold. Its woody, musky, slightly honeyed flavour goes beautifully with fish, shellfish, chicken, egg and potato. Try it in aïoli, to go with asparagus or to trickle over fish stew. Sprinkle some into the cooking liquid next time you poach pears in sweet wine. But be careful: just as the right amount can be sublime, too much can taste bitter, medicinal.

Thanks to its high value, saffron has always been prone to fakery – in 15th-century Germany, saffron adulterers were burned at the stake or buried alive. These days, we may not be quite so dramatic about it, but you should still be wary. Look for fine, richly coloured, orangey-red strands and beware of fakes. Ground saffron, in particular, can be dodgy, adulterated with everything from turmeric to safflower petals – remember, if it's going cheap, it's probably fake. You can buy organic saffron online at steenbergs.co.uk. Store it in its wrapper in an airtight container in a cool, dark place and it should keep for a couple of years.

Saffron chicken with rice

Golden saffron rice and juicy chicken is a great combo. Serves four to six.

½ tsp saffron threads, crumbled

1 free-range chicken, jointed, or about 1.5kg chicken pieces

Salt and freshly ground black pepper

2 tbsp olive oil

2 onions, peeled and diced

1 celery stick, diced

4 garlic cloves, peeled and minced

1 tsp finely chopped thyme leaves

1 bay leaf

½ tsp ground cumin

400g long-grain rice

100g green olives, stoned

¼ tsp smoked paprika (optional)

350ml chicken stock

150ml white wine, pale beer or water

A handful of coriander leaves

Soak the saffron in a couple of tablespoons of hot water for 20 minutes. Season the chicken. Pour the oil into a large casserole and, over a medium-high heat, brown the chicken in batches (don't overcrowd the pan).

Transfer the chicken to a plate and pour off all but two tablespoons of the fat in the pan. Sauté the onions over a medium-low heat until they just begin to turn golden, add the celery, garlic, thyme, bay leaf and cumin, and sauté for a couple of minutes more. Stir in the rice, olives, saffron (and its soaking liquor), paprika (if using), stock and wine (or beer or water). Season, place the chicken on top of the rice, cover and simmer for 30 minutes, until the rice is tender and the chicken cooked through. Check after 20 minutes – if it's a bit dry, add a splash of hot water from the kettle. Stir in some torn coriander, adjust the seasoning and serve with more coriander on top.

Saffron honey ice-cream

A beautiful, delicate and sunny ice-cream. Serve with shortbread biscuits or scattered with toasted pistachios or almonds. Makes 800ml, or enough for four to six servings.

300ml whole milk

1 generous pinch saffron threads

4 large egg yolks

80g caster sugar

2 tbsp runny honey

300ml double cream

Put the milk and saffron in a saucepan and heat, stirring a few times, until bubbles appear at the edge. Set aside to infuse for 20 minutes.

In a heatproof bowl, whisk the egg yolks and sugar until light and creamy. Beat the milk into the egg mix, then place the bowl over a pan of barely simmering water (the bowl shouldn't touch the water) and stir until the custard coats the back of a spoon. Remove from the heat, stir in the honey and cream, cover the surface with clingfilm or greaseproof paper to prevent a skin forming, and leave to cool. Strain through a fine sieve and churn in an ice-cream maker according to the instructions. Scrape into a plastic container and cover the surface with greaseproof paper. Freeze for at least a couple of hours. Remove from the freezer about 15 minutes before serving.

Cornish saffron tea bread

Adapted from an Elizabeth David recipe, this makes a delicious afternoon treat spread with butter or a dollop of clotted cream, or, as David suggests, eaten with a glass of sauternes. It tastes best the day it's made, though it is very good toasted the next day, too. Makes one loaf.

220ml milk

½ tsp saffron threads

500g plain flour

1 tsp salt

¼ tsp freshly grated nutmeg

¼ tsp ground cinnamon

¼ tsp mixed spice

120g butter (or 50:50 butter and lard), plus a little extra for greasing

5g quick active yeast (the kind you mix straight into the flour)

60g caster sugar

60g sultanas

60g currants

For the glaze

2 tbsp milk

2 tbsp caster sugar

The night before, warm the milk until bubbles appear around the edges of the pan, add the saffron and leave to infuse overnight.

Next day, sift the flour, salt and spices into a mixing bowl. Rub in the butter with your fingertips, then stir in the yeast and sugar. Warm the saffron milk to blood temperature. Make a well in the flour, pour in the milk and work in with your hands. When it comes together into a soft dough, tip out on to a lightly floured surface and knead until silky and smooth, about 10 minutes. Scatter over the sultanas and currants, and knead in until evenly distributed. Place the dough in a warm, lightly oiled bowl, cover with a plastic bag and leave in a warm place to rise until doubled in size – this can take a couple of hours.

Lightly butter a 1.5 litre loaf tin. Turn out the dough on to a lightly floured surface, knock it back, shape into a loaf and place in the tin. Cover and leave in a warm place until the dough almost reaches the top of the tin – about an hour. Heat the oven to 190C/375F/gas mark 5.

Bake for 25-30 minutes. Warm the milk and sugar for the glaze, stirring to make sure the sugar dissolves. As soon as you take the tea bread out of the oven, brush with the glaze. Leave to stand in the tin for 15 minutes, then turn out and leave to cool completely before cutting.

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