North of Quito one passes through parched lands. Roads snake down to dry rivers, only to coil back up to even drier passes. The odd talisman of green flourishes, but otherwise the hills are tanned to Andalucian aridity.

Some 100 kilometres out, one approaches the great dormant volcano of Imbabura, and the thirsty landscape begins to receive more rain. Once the dust has turned to tillable earth, the Pan-American Highway descends towards the lake of San Pablo, with the town of Otavalo guarding its northern shores. Driving along the lakeside road, fields stretch down to the shore, while peasants drive their cattle along the grassy fringes.

WEAVING TALES

Otavalo hosts probably the most famous tourists' market in South America, and most definitely Ecuador's most important. The Otavalan Indians are renowned for their textiles and weaving, but also for their business acumen, and ambition. They rank among the continent's most prosperous indigenous people, proud of their heritage - they still wear their colonial-traditional dress - and yet able to take advantage of the First World's need for souvenirs, bright colours and fake plenties.

The men of Otavalo wear three-quarter length white trousers, white alpargata shoes beneath them, flowing dark ponchos, and hats of differing sizes and colours. The women are instantly recognisable by the layers of gold necklaces which throng their necks, but also by their black or dark blue full-length skirts and beautiful, puffy white blouses embroidered with colourful patterns, lengths of dark cloth folded around their heads shading them from the midday sun.

The town's biggest day is market day, Saturday. But such is the popularity of Otavalan produce (though a large part also comes from other parts of the country) you can visit any day of the week and still find the Plaza de los Ponchos muffled by stalls. On Saturdays, hundreds of stands plug the avenues leading to the square, the ones running east slowly becoming less touristy, dominated by pots and pans and tupperware, until you reach the arcades of the produce market, jammed with piles of every variety of fruit, vegetable, fish and meat. The weavings are beautiful, ranging from rugs of symmetric red, brown and blue patterns, dark tightly-woven ponchos, bright woolly hats festooned with flowers, the oranges, yellows and greens of hammocks, through to quite Westernised sweaters and zip-up tops of just a few colours.

To add to the textiles, stalls also overflow with musical instruments (those infernal whirly drum things and the inevitable panpipes); intricately-painted ceramic bowls; miniature paintings from the Indians of Tigua, masters of representing their world of puffing volcanoes, fluffy lamas and busying locals; wood carvings of jagged-jowled men; and jewellery of every size and description. Although undeniably a tourist trap, the quality of the crafts on sale is so high I didn't mind feeling like another gringo. I enjoyed bargaining with wrinkly old women and fresh-faced young girls for dinky sweaters for my nephews and nieces.

ANIMAL FARM

Bartering of another kind takes place early on Saturday morning, at the animal market on the eastern outskirts of town. Each animal has a particular section in the outdoor market. You enter through a hole in the barbed wire fence where officials tax the buyers 20 cents on every purchase.

You're immediately squelching in the mud of hundreds of trotters and barefooted Indians, as swine ranging from the squealing weeks-old piglets to the mammoth 160-kilo (354-pound) hog are inspected, haggled over and eventually sold. Indian women tethered cords which fanned out to runts of piglets happily rooting around in the mud for scraps, while a mestizo family threw pigs out of the back of their van to buyers who prised the poor animals' jaws open with crowbars below. After the pigs come the sheep, huddled in bleating flocks around their owners, and then the cows and the occasional bull of all sizes and colours, insouciantly splurging cowpats and urinating while their masters decided their fates.

None of the locals paid the odd tourist the slightest bit of attention, and my friend Rafael and I went around interviewing the peasants, asking them where they were from, how much they expected their cow to fetch and what the weather was going to do. Most of them still talked in sucres, Ecuador's old currency, even though it's 16 months since the economy was 'dollarized' (an ugly word for an ugly thing).

I ran around taking surreptitious photos, managing to catch the woman who had a sheep instead of a baby slung around her back, but failing to get the old woman clasping two large cockerels beneath her ample bosom, only their heads and claws emerging from the folds of her embroidered, billowing blouse.

WORD OF MOUTH

In the afternoon, Rafael and I went to visit one of the few Quichua-speaking (indigenous) radio stations in the country. It was located in a village to the north, where a football game captured the attention of the locals and tightly-sown fields of corn divided the houses, in a dingy, dank room at the back of a semi-abandoned house.

The station, Radio Ilumán 96.7 FM, was manned that afternoon by two young guys. They were very wary of answering questions at first, but opened up after Rafael allayed their fears. About 90% of the station's output was in Quichua, beginning at 5 am with a programme whose name, Rikcharishun, translates as 'Happy to Awake' (a tad optimistic?), and followed by the news at 7 am in the programme Shimi Willachick, which means roughly 'from the mouth'. Educational and health pieces punctuated the diet of Andean folk music. some of the groups smiled out from the posters which adorned the peeling walls: Byron Solis, Marga Lugue "La Pequeña Gigante de la Canción", and Pepe Richard y su Nueva Generación, posing in a field of potatoes and pylons.

The station reached the whole Otavalo area. Much to our surprise, and my stupefaction, the teenagers turned the tables on us: we ended up being interviewed live on air about what we were doing and what we thought of Ecuador and the Imbabura region. I managed to say hello to my Mum before dribbling something hopefully half-meaningful into the squeaking microphone.

LA ESPERANZA

On the other side of the Imbabura volcano from Lago San Pablo and Otavalo, there's a small village folded into the hills called La Esperanza.

From here, Bolívar gathered his troops before taking the provincial capital of Ibarra from the Spanish. Today, travellers gather mushrooms, and go for spaced-out hikes up the mountain. The hills all around are furiously cultivated and when not, are peopled by herds of black and white cows.

Rafael, his fellow radio-friend Jesse and I set off on the old cobbled and rutted road that leads round the mountain. It wound through the coloured terraces of fields, ringing the hills like the seats of an amphitheatre, divided by mud-packed brown walls topped by sprouting green bushels or bright yellow rape-seed. The road only twice divided for no good reason and with no indication as to which was the right way. We had to wait for a local to come along and tell us what must have seemed blindingly obvious to them.

Rafael had spent some time in La Esperanza when he lived in Ecuador. It boasts all of two hosterías. One is posher than the other, which makes it sound luxurious. It isn't. My room's ceiling was composed of coarse sacking, the bed was older than me, and the doorlock was a length of string.

The other posada was more run-down and currently undergoing serious restructuring. Most of the back patio had been excavated to make way for new plumbing. Intense rivalry flowed between the two establishments, and the two women who ran them. Maria, the one from the cheaper place, much to Rafael's astonishment, had emigrated to near Valencia in Spain. Just one of the flood of tens of thousands of Ecuadorians who have fled the economic crisis, only to be coldly-received or repatriated in Europe or the States.

Maria's son, Patricio, now ran the place. The entrance led into a large echoing room, the comedor-cum-bar. It had been painted at some point with alpine scenes, the bar top and stools were straight out of the seventies, and various trophies for cycling, running and speed-walking won by Patricio vied for dust in a glass vitrine. The room looked pretty shabby until we lit it with candles and put some Santana on the stereo - the only thing that didn't date from the last decade in the house.

There we met a Frenchman, Stéphane, a Breton who made so much money baking pizzas and living in a bus in the summer months in Bretagne that he spent most of the rest of the year travelling. He'd worked as a chef across the American continent, most recently in Ushuaia, the most austral town in the world at the bottom of Tierra del Fuego. He immeasurably redeemed the French people in my eyes - I've been losing faith in them steadily since my first Lycée day I think.

He had been travelling on and off for the last sixteen years; he was now a tanned, slightly wrinkled 36. He ranks among the most friendly people I've met, in the sense that he'll make friends with anyone, with an insouciance and joie-de-vivre that takes years to achieve. Some people then lather themselves with this mañana mentality, and seem to wallow in their I'm-so-relaxedness. He didn't. He had also achieved another rare state of being: generosity. Whether rolling a joint from his stash, sharing his knowledge of the country or his travels, or buying and cooking us all trout one night, his altruism filled me with warmth.

We went for a walk one afternoon, (shortly before my jeep broke down to be ignominiously towed back to town by an old tractor). Up in the hills, we played football on the mud road with three un-breathless boys who stormed into the fields of corn every time the ball was kicked awry. They disappeared, only for the ball to come magically flying out of the rows of swaying leaves.

At the top of a hill, we were rewarded with fleeting glimpses of the glorious, snow-capped Cayambe volcano. We passed various families with their animals, tilling the fields or making their way along other eucalyptus-lined lanes.

We stopped at a house with a 'Coca Cola aqui' sign in what seemed like the middle of nowhere. It was amazingly well stocked, despite the floor being of compacted earth, and the family living in a penumbrous mud-walled house. Just by the door to the shop, above the bench for sitting on, painted lettering read 'Paz, sonrisa del mundo' (Peace, smile of the world).

PINSAQUI

Pedro Freile has a smile for most people. Pedro belongs to the family that owns Hacienda Pinsaquí, to the north of Otavalo. The house has been in the hands of the Freile family for six generations now, and only opened its doors to paying guests seven years ago.

There are in fact three Pedro Freiles. The elder, now in his sixties, is renowned for his love of horses. He is famous for greeting his guests in the bar for an aperitif - on horseback. There are photos of him with a magnificent chestnut Arab - in the master bedroom. The second Pedro is the one I met, with the gait and demeanour of someone who has grown up wealthy and powerful. He too is equinely-inclined, leading the third Pedro, who must be about eight, on horse-back rides through the hacienda's grounds.

The house's furniture, including an exquisite chandelier and a behemoth writing desk, comes mainly from France and Europe. It was brought back by the free-wheeling and free-spending Freile of the early 20th century (thankfully not called Pedro, but ironically named Modesto), who was, interestingly, rumoured to have been a lover of Frida Kahlo while ambassador to Mexico.

I had a chat with Pedro in one of the hacienda's salons. Pinsaquí's cobbled paths and walls are thick with history. On his troubled travels to and from Bogotá and Quito, Simón Bolívar would stay at the hacienda, and though unproven, doubtless met his lover Manuela Sáenz here for furtive fumblings, before returning to "plough the sea" of Latin American independence. In the late 19th century, the hacienda hosted the peace treaty drawn up between Colombia and Ecuador after the Ecuadorian president had backed the wrong horse (the conservatives) in one of Colombia's endless civil wars.

Pedro, an amiable man, his face of thirty-odd just giving in to bon-viveur chubbyness, grappled with the dates, and doesn't seem the intellectual type. The events he recounted, instead of coming to life, seemed to float about in the tall ceilings of the room. He didn't seem passionate, turned on to anything he spoke of, apart from horses. He was somehow detached from it all, in the way only an absentee landlord can be.

He didn't try to justify his life, or his family's history. The fact that in the nineteenth century the hacienda ranged over some 7,000 hectares (17,000 acres), and had some 1,000 Indians working their hands bare on its textile looms, didn't mean he then told me about their present-day progressive social programmes. Because they don't have any. Or at least, he didn't bother to mention them.

One approaches the main house through imposing gates, the front garden rolling down to a burbling fountain at the hacienda's main entrance, which then divides into two wings. At the gate, on every occasion I drove up, a different generation of one family came scuttling out of the gatehouse to open it. From an old wrinkly Indian man, to his sad-eyed son, to his eyes-downturned granddaughter. I imagine the old man has been opening the gate all his life, and wonder if his son, and granddaughter, will do the same.

Although the Otavalan Indians have come a long way, becoming successful entrepreneurs, radio disk-jockeys, mayors and even congressional deputies, there are some corners of Ecuador that will forever be Pinsaquí.

While in the Otavalo area, a beautiful place to stay up in the surrounding hills is Casa Mojanda. Contact Betti and Diego, and tell them we sent you! "A journey and a destination" A beautiful, ecological retreat in the hills above Otavalo