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Mushrooms are traditionally packaged in single‐use retail packaging made of commercially available polyethylene terephthalate. It is now necessary to replace these plastics, which, after use, significantly pollute the environment, with biodegradable alternatives. After the jute fibre is extracted from the jute plant, the jute stick is left behind and can be used to make packing paper. Jute stick was used as a raw material for the development of packaging paper following three pulping methods: (i) alkaline sulfite anthraquinone methanol (ASAM); (ii) kraft; and (iii) peracetic acid (acid) methods. An analysis was conducted on the pulps' yield, chemical composition, crystallinity, whiteness, and cost‐effectiveness. From each pulp, three gram per square metre (GSM) of paper (100, 200, and 300) were produced and their rates of water vapour transfer, swelling, and physical and mechanical absorption were assessed. The acid approach was the most expensive, whereas the ASAM method produced the highest yield (50.2%). The acid pulp paper had the longest folding endurance with three to five hundred double folds. Although kraft paper's water absorption time was just 0.5–1 min, it had a higher tensile index than ASAM paper. For this reason, ASAM200 paper was chosen for making the packing tray. After ten days, there was no discernible difference between the mushrooms packed in the ASAM200 packing paper tray and those in commercially available PET containers kept at 5°C and 65% relative humidity in terms of weight loss, colour, texture, and general acceptability. Therefore, it was discovered that ASAM200 paper might be a sustainable option for packing highly respiring fruits and vegetables. [ABSTRACT FROM AUTHOR]