Ast Pace took part of the sentiment here. Flocking fibres are not that expensive. Also a stat/faq for a particular supplier:
How Much Flocking Do I Need? 1 ounce of flocking fiber will cover about 3 square feet. (depending on recovered fibers)
If you are doing something like bandsaw boxes you don't need that much (as long as you are not too liberal and reclaim loose flock). However I am all for DIY so I will present the two solutions that seem applicable and that require tools and materials related to woodworking.
Sandpaper and Paper
This option yielded better results aesthetically but was also the biggest pain. Just take some sandpaper and mount it on a block or foam. Run it on the paper and it will make / pull fine fibers of the paper. This has a better result then the next suggestion I found.
Sawdust and Paint
I know that I can get a good amount of sawdust powder when I am working on some of the finer projects. Using small amount of paint you can mix it with saw dust powder (finer the better) to get half decent flock. Issues here are that sawdust is not good for the lungs so you need to be careful working with it. Also it will not be as fine as commercial products as the use much more involved materials and processes.
This came up more wear people were making terrain for models and game boards that size and texture were considered good points as it added to the authenticity. True flock would not have been as aesthetically pleasing.
Honestly just buy it.
I think you will get much better results. I am not sure what size the projects you are thinking of are but the stuff is rather cheap. True there are some tools considerations for apply it but they are only useful if you plan on doing this alot. Again, not advocating the site or product but the first thing I came upon sells 1oz bags for under 2$ (without shipping of course). Your local craft stores would unexpectedly carry products like this. My local hobby store has this stuff but only in green.