This achievement is obtained by helping out the painter in the valley. His place is higher up, and you'll be able to tell by the yellow paint drips on his house.
Just talk to him, and follow his directions. He will ask you to find the pencil hat, which is in the next room. Then, he will tell you to paint a scarecrow face. After you select the canvass just back out without painting anything to unlock the achievement. (thanks Lord Marmalade).
Thanks to Mr Splash.
Edit - If you draw anything on the canvass, then you would have to restart the game in order to unlock this achievement.