Breeding

Breeding is an upcoming game mechanic in the next beta update of Minecraft. It will allow fed animals to breed with each other to make new animals of that species. Notch most likely for fun tweeted: "You know what would be fun? If every single animal in minecraft came from eggs. Breeding would involve moving egg blocks around."

Current Mechanics
As of Beta 1.9 pre-release 2, Pigs, Sheep, Cows and Chickens follow you if you have wheat in your hand and are within 16 blocks. If you feed them the wheat, you enter the "love mode". Animals in "love mode" emit hearts at a constant rate and will path towards nearby animals of the same type that are also in love mode. After about a second, a third animal of the same type spawns on one of the parents which both end love mode.

Currently, all animals are grain-fed and require two wheat to produce a single animal of any type. After initial investment in a ranch, animals can essentially convert wheat into various resources at a constant average rate A confined space is necessary to get them to breed efficiently. Despite laying eggs, chickens do not use them to breed. All sheep are born white irrespective of their parentage. Animals are uninterested in wheat lying on the ground.