This paper proposes the application of hierarchical models to the assessment of feed efficiency in beef cattle. Using a large dataset comprising 5600 cattle assembled from different experimental studies, feed efficiency rankings of cattle were estimated using the proposed approach. This was compared to more commonly used linear, and nonlinear estimators. A phenotypic selection scheme that selects cattle at the means of different percentiles was developed to illustrate potential economic and environmental outcomes resulting from changes in feed efficiency rankings. The former involved the specification of a multi-year stochastic farm simulation model. In general, our results show that improved feed efficiency is associated with positive economic and environmental benefits. A unit reduction in feed intake (kg as fed/day) is associated with an average increase of $13.23 in net returns and 33.46 tonnes reduction in emission at the end of the feeding period. We also find that feed efficiency ranking of cattle is sensitive to estimation approach. The within percentile mean estimates of the hierarchical model were comparable to the conventional linear estimator. There were, however, deviations at the tails of feed efficiency distributions where selection is most likely to occur.