A method and system for melt processing a thermoplastic composition that contains a starch and plasticizer is provided. The composition is melt blended and extruded through a die to form an extrudate, which is thereafter cooled using a multi-stage system of the present invention that includes at least one water-cooling stage and at least one air-cooling stage. More particularly, the extrudate is initially contacted with water for a certain period time so that it becomes partially cooled and solidified on its surface. After the water-cooling stage(s), the extrudate is also subjected to at least one air-cooling stage in which a stream of air is placed into contact with the extrudate.