The idea is that if you do not keep sheep for wool, the land the sheep would normally graze on can be used for growing crops to feed more people.
Whoever said this needs to visit the mountainous areas of Britain where sheep are bred for wool and meat. The land they graze is not suitable for growing crops. As @herdyshepherd1 said to someone who asked why he didn't grow carrots instead, "Carrots don't grow here".
The long view is that people have been farming for thousands of years so where crops grow there are generally crops growing and where crops don't grow cattle, sheep or goats are raised. It's only recently that there have been widespread alternatives to meat that are even nearly as power and vitamin packed as meat is. You can't really expect thousands of years of custom to vanish in a generation.
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