Before the advent of cars, one could see and smell the emissions of horse-drawn wagons in New York. Since there was no way of controlling these emissions, they - or the undigested oats in them - served to nourish a large population of English sparrows. If you said that something was for the birds, you're politely saying that it's horse crap. (source)
Today when the phrase is used its meaning is that it is something worthless.
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