A new and useful apparatus has been devised for grinding paper into cellulose fiber insulation in which a hammermill or rotary beater has a paper feed inlet which establishes a low pressure zone at the entrance to the hammermill housing whereby to encourage reverse flow of partially ground materials from the outer perimeter of the hammermill into the low pressure zone, the partially ground material tending to collect in the form of a vortex and to recombine with the main stream of material being supplied into the feed inlet. In this way any of the partially ground or shredded material not small enough to pass through a classification grid or screen at the discharge of the hammermill will continuously intermix with the main stream of material for continuous grinding to the desired size.