Now I am interested if this is in fact true. I have certainly heard this argument made, and it is often alluded to e.g. in describing the problem in China of producing enough meat to satisfy an increasingly affluent society (the subtext being, 'with the same constrained resources').
Going to poke around a bit...
QED if you are not vegetarian and have no interest in being, the 'greenest' thing to do is to reduce or eliminate beef consumption.
http://ajcn.nutrition.org/content/78/3/660S.full is glum.
(I looked at resource usage, not the ethical side; fwiw I'm an ethics-motivated vegetarian myself.)
E.g., what's the difference in price between a burger made from ground beef vs a similar sandwich with grilled chicken?
In smaller, more diverse farms, animals contribute to the overall output because they improve land that is fallow, turn waste into food and manure and provide food that complements plants effectively in our diet.
We have the technology to farm this way, at scale, but it is politically infeasible and there won't be any demand for it until the specialized products of our current system become much more expensive.