Wheat can normally appear on lands that have grass and no trees. It only produces one Wheat per seed. It may drop only 1-2 wheat seeds and Wheat or none of them if cut.
The Wheat can be used to make Bread, which restores 6 hunger and is considered good to sacrifice for the gods. However, because of the newest update, permanent wheat farms are no longer possible, unless you keep cutting them for seeds after 3 harvests.
That used to be the best way to make food via farming. Sniff... -SealMaster50