A two-phase method for making fiber-reinforced compositions was developed to achieve uniform fiber dispersion in a composite matrix. The first phase involved mixing together water, fibers, and a portion of a fiber dispersant to form a viscous composition. The high viscosity imparted by the dispersants effectively separated the fibers during a fifteen minute mixing process. In the second phase, additional starch or other additives were mixed into the dispersed mixture. Starch-based compositions were extruded through a rod die, dried to less than 20% moisture content and pelletized. The dried pellets were conditioned to moisture contents ranging from 5-15% and extruded at 130°C through a 2 mm rod die to form an expanded fiber-reinforced starch-based foam. The density, tensile strength and compressive strength of the foam were dependent on the moisture content of the pellets. Tensile strength, resiliency and moisture resistance were improved by adding ethylene vinyl alcohol copolymer to the composition.