Sheep are bearers of wool, a great natural asset for humanity throughout history. However, there is an age old problem that goes with that that has distressing results both in effect and current solutions. Around the back end of the sheep, there is often feces stuck to the wool (called dags), which attracts flies which lay their eggs there. These flies hatch as maggots, and the maggots eat the feces, wool, and the flesh of the sheep, a horrifying thing to witness, called fly strike. The current solution is mulesing, a procedure that has animal welfare groups up in arms. It entails clipping the top level of skin, or all of the skin around the back end of the sheep, so that the wool doesn't grow there, stopping the start of fly strike. The sheep is raw and sore for the time it takes to heal, and it is just as horrifying to witness. Here are some other ideas of what can be done.
There are some birds and other animals that eat flies and maggots (and ticks) specifically, like the ones that live on the backs of wild animals (giraffes, wild oxen) in Africa or Asia. If you introduced them to the herd, fly strike would be greatly reduced.
There is also electrolysis, the procedure of electrically burning hairs at the root so that it does not regrow. However, for a thickly wooled sheep, that would take forever.
Then there is genetics. Either by selective breeding, or by genetic engineering, a sheep could be created that does not have hair around it's rump.
A natural chemical could also be sprayed around the rump that flies find repulsive so they don't land there. It would have to be oil based for long lasting effect (in the rain and sun). Maybe eucalyptus oil, or cedar oil, or tea tree or pine or a mixture of these, mixed with lanolin, the natural oil from fleece, logically.
These options I think are better to both mulesing and fly strike, and worth experimenting with. They are all fairly cost effective and time effective, except electrolysis, and with a bit of tinkering could be quite an cash cow for anyone who puts the effort in.