The United States Department of Agriculture (USDA) beef grading system plays an important role in marketing and promoting of beef. USDA graders inspect beef carcasses and determine quality grade within a few seconds. Although the graders are well-trained, the nature of this grading process may lead to grading errors. In this paper we examine whether systematic grader bias exists in calling quality grade. Using data from a large-scale packing plant in Midwest we find that seasonality of beef demand and macroeconomic events influence the grading behavior of USDA graders. Producers gain financially from grade called by USDA graders rather than measured by camera.


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