A method of preparing lignocellulosic fiber aggregates from a densified mass of lignocellulosic fiber, such as densified bales, for use in manufacturing high performance, recyclable and moldable lignocellulosic fiber and thermoplastic composites, or articles made of the high performance, recyclable and moldable lignocellulosic fiber and thermoplastic composites is provided. The method includes: (a) feeding densified forms of lignocellulosic fiber into a size reduction device; and size reducing the lignocellulosic fibers so as to produce dense lignocellulosic fiber aggregates having an average size profile suitable for use in manufacturing high performance, recyclable and moldable lignocellulosic fiber and thermoplastic composites, or articles made of the high performance, recyclable and moldable lignocellulosic fiber and thermoplastic composites. The density of the lignocellulosic fiber is generally maintained throughout the method. A system for preparing lignocellulosic fiber in accordance with the method is also provided.