Minecraft wiki entry for Wool_farming, associated text: You can get wool by shearing sheep, killing sheep, or crafting it out of string. Shearing sheep is often advantageous as it means that they can regrow their wool by eating grass. They will eat grass soon after it grows, Observers can be used to detect grass being eaten and activate dispensers, which can shear sheep if their hitbox is in the block in front of the dispenser.