Works fine with both bulk or bale. Did you placed the proper paper factory or the base-game one? Also the recipe is with either flax or hemp fiber, not just miscanthus.
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That one is the planting rhyzomes. It is used with a modified potato planter to plant myscanthus. The shedding is by harvesting the crop with a forage harvester (like chaff), so now I understand. Sorry for not specify this in description. Although I have no idea of what container you talk about. In store you can buy myscanthus for planting in wooden boxes.