Is replacing poor-quality flour sacks with good-quality ones, along with paying a cash or in-kind increase, considered usury (riba), and what should be done about it?

What your father did is precisely usury (riba); based on the saying of the Messenger of Allah, peace and blessings be upon him: "Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, salt for salt, like for like, hand to hand. Whoever gives more or takes more has engaged in riba. The taker and the giver are equal [in sin]." Flour is ground wheat, so it must be exchanged for an equal amount without any increase. The Shariah-compliant solution for this is to sell the flour and then buy whatever one wishes with its price, just as the Prophet, peace and blessings be upon him, commanded to sell poor quality dates for dirhams and then buy good quality dates with those dirhams. Your father must repent to Allah, and you should reverse this transaction if possible. If not possible, then there is no harm in benefiting from these sacks, as they have become compensation for your money owed by the buyer.