GLOBAL IMPACT: Global food reserves are at their lowest food in a quarter century, so bad weather and harvests have a big impact on prices of bread and other food worldwide.

IN AN increasingly interlinked world, the price of escargot in France can be affected by drought in Australia.

In decades past, farm subsidies and support programmes allowed major grain exporting countries to hold large surpluses, which could be tapped during food shortages to keep prices down.

But new liberal trade policies have made agricultural production much more responsive to market demands - putting global food reserves at their lowest in a quarter century.

Without reserves, bad weather and poor harvests now have a bigger impact on prices.

'The market is extremely nervous. With the slightest news about bad weather, the market reacts,' said economist Abdolreza Abbassian.

That means that a drought in Australia and flooding in Argentina, two of the world's largest suppliers of milk and butter, sent the price of butter in France soaring by 37 per cent from 2006 to 2007.

Butter can constitute up to 40 per cent of an escargot (snail) dish.

'You can do the calculation yourself,' said Mr Romain Chapron, president of Croque Bourgogne, which supplies escargot. 'It had a considerable effect.'

The same climate crises sparked a 21 per cent rise in the cost of milk, which with butter makes another famous French food item - the croissant.

Panavi, a pastry and bread supplier, has raised retail prices of croissants and pain au chocolat (a French pastry with chocolate bits) by 6 to 15 per cent.

Attempts to control prices in one country often have dire effects elsewhere.

China's restrictions on wheat flour exports resulted in a price spike in Indonesia earlier this year, according to the UN Food and Agriculture Organisation.

'We need a response on a large scale, either the regional or international level,' said Mr Brian Halweil of the environmental research organisation Worldwatch Institute.

'All countries are tied enough to the world food markets that this is a global crisis.'

ASSOCIATED PRESS