I recently went to the Orkney Islands of Scotland, and they have a type of sheep that has been somewhat intentionally adapted to scarce resources on the islands. Ranchers, wanting as much grazing land as possible, would put sheep out to pasture on the shoreline, where they began eating seaweed.

Because the sheep can't get as much nutrition from seaweed as from grass, they are quite a bit smaller than regular sheep, although I don't know if they'd be considered 'dwarf' or not. Look up Ronaldsay Island Sheep.

Over time, they've adapted quite well to eating seaweed, and now forage completely on seaweed their entire lives, making them one of only three animals on earth able to subsist on nothing but seaweed. The others are abalone and a Galapagos Island lizard that swims out into cold water to dine on algae, chancing not being able to return if they stay out too long and get too cold to swim (since they are cold blooded). Nature is fascinating.