The analysis of the chemical nature of wood waste processing by fungus and bacteria was the starting point for innovative production of a new, relatively simple, colloidal catalytic system based on iron (III) oxides, combined with environmentally friendly oxidants - hydrogen peroxide and/or atmospheric oxygen. Colloidal iron(III) oxides, obtained by hydrolysis of Fe(III) salts in water in the presence of surfactants, catalyze the oxidative destruction of lignocellulosic biomass under atmospheric pressure, at a mild temperature range of 60-70oC, under the influence of H2O2 and O2. The oxidative destruction of biomass (wood sawdust, peat, olive press cake, oat straw) results in formation of light organic acids, esters and other low molecular oxidation products derived from lignin, hemicelluloses, cellulose, lipoproteins and sugars; the solid product constitutes mainly of cellulose and its derivatives. The yield of solid residue depends on biomass nature, reagents concentration ratio (biomass, catalyst, hydrogen peroxide), and oxidation process duration. Water solution of organic acids and esters can be used in agriculture for fodder processing.