While still contending with the impact of the fire at its Saipol subsidiary's Grand-Couronne plant at the weekend, Avril said it was reducing by 25 percent the volume of oilseed it would crush at its Le Meriot plant in the face of intense competition and unfavourable market conditions.

Le Meriot has capacity of about 1 million tonnes of oilseed per year.

"Avril announces that it is forced to reduce in 2017 the volumes of processed seeds in its factories. This decision aims at preserving the competitiveness of its facilities for French farmers," the group said, adding that there would be no impact on jobs.

Overcapacity in the European seed-crushing and biodiesel industry and a steep fall in orders had forced Avril to cut production at some of its French biodiesel plants last year, though the company's CEO said this month that the sector outlook had improved after a rebound in oil prices.

The fire at Grand-Couronne, which crushes about one million tonnes of oilseed a year, affected the plant's electric supply system and triggered extinguishing systems, an Avril spokesman said on Wednesday, confirming a letter to clients seen by Reuters.

"As the power supply at the plant is damaged, production at the site is temporarily interrupted," he said.

Force majeure was declared by Saipol, the letter said, adding a request that suppliers delay oilseed deliveries to July/August and clients load out product at other units of the group in Le Meriot, Pagny or Lezoux.

Separately, Saipol will ask suppliers to change their contracts for the 2017/2018 season starting on July 1, cutting the premium for rapeseed oil content above 40 percent.

French brokers said that Saipol proposes to cut the premium paid in 2017/2018 to 1.35 percent of the rapeseed price per additional point of oil content, from 1.5 percent previously.

French rapeseed's oil content levels regularly surpass 42 percent.

The move follows an aborted attempt by Saipol to raise the oil content benchmark in its contracts to reduce the quality premium it pays.

Despite an increase in France's national blending targets in recent years, policy uncertainty in the European Union, which has moved to curb the role of crop-based biofuels because of environmental concerns, has limited growth prospects.