Many petroleum-derived plastics, including food packaging materials are non-biodegradable and designed for single-use applications. Annually, around 175 Mt. of plastic enters the land and ocean ecosystems due to mismanagement and lack of techno economically feasible plastic waste recycling technologies. Renewable sourced, biodegradable polymer-based food packaging materials can reduce this environmental pollution. Sugar production from sugarcane or sugar beet generates organic waste streams that contain fermentable substrates, including sugars, acids, and aromatics. Microbial metabolism can be leveraged to funnel those molecules to platform chemicals or biopolymers to generate biodegradable food packaging materials that have active or sensing molecules embedded in biopolymer matrices. The smart package can real-time monitor food quality, assure health safety, and provide economic and environmental benefits. Active packaging materials display functional properties such as antimicrobial, antioxidant, and light or gas barrier. This article provides an overview of potential biodegradable smart/active polymer packages for food applications by valorizing sugar industry-generated organic waste. We highlight the potential microbial pathways and metabolic engineering strategies to biofunnel the waste carbon efficiently into the targeted platform chemicals such as lactic, succinate, muconate, and biopolymers, including polyhydroxyalkanoates, and bacterial cellulose. The obtained platform chemicals can be used to produce biodegradable polymers such as poly (butylene adipate-co-terephthalate) (PBAT) that could replace incumbent polyethylene and polypropylene food packaging materials. When nanomaterials are added, these polymers can be active/smart. The process can remarkably lower the greenhouse gas emission and energy used to produce food-packaging material via sugar industrial waste carbon relative to the petroleum-based production. The proposed green routes enable the valorization of sugar processing organic waste into biodegradable materials and enable the circular economy.