Sheep kept by farmer in outhouse (6)
I believe the answer is:
merino
'sheep' is the definition.
(merino sheep is a kind of sheep)
'kept by farmer in outhouse' is the wordplay.
'kept by' says the answer is hidden in the clue.
'MERINO' can be found hidden inside 'farmer in outhouse'.
(Other definitions for merino that I've seen before include "Long-haired sheep" , "Spanish breed of sheep with high quality fleece" , "Type of sheep" , "Fine woollen yarn" , "Breed of sheep with fine wool" .)