A method and system for processing biomass material from harvest to pelletizing includes a continuous shredding stage and grinding stage to reduce the size of the material. A fan pulls air through the shredder and the grinder to assist the movement of the biomass material through the shredder and the grinder. Due to the light weight of the biomass material, the material is transported between the shredding and grinding stages mechanically and pneumatically by a combination auger with air assist. The biomass material may include agricultural residues, such as corn stover. The process and equipment eliminates or minimizes damage to the carbohydrates in the biomass so as to maintain pre-grinding cellulose and hemi-cellulose levels.