Most of the food-packaging materials are made from single-use plastics from petroleum sources, depleting the environment and adding to waste management issues. Natural fiber is a renewable, biodegradable alternative that has immense potential to be used as a food-packaging material. This review aims at reporting the strengths, limitations, and engineering considerations of the use of lignocellulosic biomass in the form of bags, paper, and particleboard for food-packaging applications. The limitations in the present application of jute bag for different grain storage and the technical interventions adapted are being explored to improve them. The recent reports about the use of lignocellulosic fiber pulp in functional paper development in targeting food packaging as the end application and further enhancement of the engineering parameters by reinforcement with nanofiber, nanocellulose, nano-hemicelluloses, and other lignocellulosic fiber components have been scrutinized. The additional functional characteristics added to conventional paper packaging due to the presence of lignin and hemicellulose are highlighted. The mechanical, swelling, and other properties of lignocellulosic particleboard, such as jute sticks, wood sticks, sugarcane bagasse, and others, with the aim of their application in the construction of rigid boxes or chests for fruit and vegetable transport in the increasing scenario of e-commerce are discussed. Challenges for the system of large-scale technological adaptation are analyzed, and the scope of future research is suggested.