Idiot treats sheep with parasite (8)
I believe the answer is:
dipstick
'idiot' is the definition.
(informal term for a stupid person)
'treats sheep with parasite' is the wordplay.
'treats sheep' becomes 'dips' (dip can mean to treat sheep with chemicals).
'with' is a charade indicator (letters next to each other).
'parasite' becomes 'tick' (type of parasite).
'dips'+'tick'='DIPSTICK'
(Other definitions for dipstick that I've seen before include "Idiot" , "Stupid person" , "Engine oil measurer" , "Rod for measuring oil in engine" , "help to motorist" .)