Plastic containers, commonly produced from non-biodegradable petroleum-based plastics such as polyethylene (PE), polypropylene (PP), and polyethylene terephthalate (PET), raise significant environmental concerns due to their persistence. The disposal of agricultural waste, specifically rice straw (RS), through burning, further compounds these environmental issues. In response, this study explores the integration of polylactic acid (PLA), a biodegradable material, with RS using a twin-screw extruder and injection process, resulting in the creation of a biodegradable packaging material. The inclusion of RS led to a decrease in the melt flow rate, thermal stability, and tensile strength, while concurrently enhancing the hydrophilic properties of the composite polymers. Additionally, the incorporation of maleic anhydride (MA) contributed to a reduction in the water absorption rate. The optimized formulation underwent migration testing and met the standards for food packaging products. Furthermore, no MA migration was detected from the composite. This approach not only provides a practical solution for the disposal of RS, but also serves as an environmentally-friendly alternative to conventional synthetic plastic waste.