THE red meat industry is outraged by legislation passed in NSW this month allowing cheaper cuts of meat to be labelled as "low quality" or "low grade".

A private members Bill introduced by NSW independent member for the Northern Tablelands Richard Torbay last year, passed through the lower house earlier this month, and now beef from older or poorer-quality animals will need to labelled.

Mr Torbay tabled the Bill, after consternation in his electorate over older beef being labelled as "budget" or "economy".

Mr Torbay's Bill - Food Amendment (Beef Grading) 2008 - will be debated in the NSW Upper House.

However the Victorian Farmers Federation is concerned that any further legislation could affect Victorian farmers.

Processors are not required to label cheaper beef, but Mr Torbay's Bill argues that there is a need to know the quality of a cut of meat.

"Inconsistent eating quality has long been recognised as the single greatest factor undermining the marketability of beef in Australia," Mr Tobay told NSW Parliament.

"Currently there is a self-monitoring system within the meat industry which has led to confusing labelling and a drop in beef consumption Australia wide.

However, VFF livestock president Chris Nixon said the bill would "take the industry back 25 years".

"All state farming groups are very concerned about this piece of legislation," he said.

"We have a world-leading grading system in Meat Standards Australia ... and producers are really beginning to see the benefits of getting their cattle graded."

But Mr Torbay argues that Australia has "no comprehensive consumer-based beef grading system that delivers customers a guaranteed quality product".

Despite the MSA program - which grades a third of domestic beef - Mr Torbay believes red meat labelling laws need to be clearer.

Last financial year, MSA processed and graded almost 840,000 cattle - a 16.5 per cent increase from the year before.

MLA managing director David Palmer told the MLA annual general meeting last week that the MSA program would grade more than one million cattle this year.

He said this was a record number - and 17 per cent higher than in 2008.

"Beef grading numbers increased by nearly 17 per cent (which is) ... equivalent of a third of the domestic market," he said.

The red meat industry has come out strongly against the Bill.