A storm is brewing over the voting rights of 430,000 farmers in today's elections for tea directors.

A total of 108 directors representing 54 tea factories across the country will be seeking to renew their mandate in rotational elections. Two of them retire yearly although they are eligible for re-election if they are below 70 years old.

But the Kenya Tea Development Agency (KTDA) elections have been overshadowed by a new system of voting based on share strength, which will see the voting rights pegged on crop deliveries to the factories for the first time.

The growers will use the secret ballot compared to the previous one-man one-vote queue system. The voting rights dispute arises from the recommendations of a sector task force that proposed last year that KTDA be turned into a company and that some of its shares be floated on the Nairobi Stock Exchange.

KTDA manages over 430,000 smallholder tea growers and 57 tea factories, accounting for 62 per cent of Kenya's tea production and six per globally. It accounts for close to Sh56 billion or four per cent of the size of Kenya's economy, which works out to a gross domestic product of Sh1.4 trillion.

Farmers fear the change in the voting criteria will allow a few farmers within a factory zone to impose unpopular leaders through their higher number of allocated votes.

While voting rights in corporate bodies is usually pegged on equity contribution, tea factory companies present a unique case where share holding is conferred upon registration, with each grower getting five shares.

Because that constitutes the basic share holding structure for the factory, farmers contest that pegging the voting rights on the number of kilogrammes delivered would favour large farmers.

Mr George Kinyua, the secretary general for the Kenya Union of Small Scale Tea Owners Association (Kusstoa), says the new system favours only large-scale producers, those with five hectares of tea bushes and above.

"We will mobilise our members to bar the purportedly-elected directors from taking office," Mr Kinyua added.

In readiness for the proposed criteria, KTDA issued bonus shares to growers based on their level of leaf delivery to the factories. KTDA group company secretary John Kennedy Omanga said each factory created 200,000 bonus shares which were distributed to farmers.

Depending on the leaf intake for the factory and the number of growers, each bonus share was allotted for crop deliveries of between 47 kilogrammes in Githongo in Meru and 192 in Kapkoros, Bomet. Each factory previously had 500,000 shares, meaning the bonus now represents 28.6 per cent of each tea factory company's voting rights.

Farmers protest that the proposed bonus share allotment is in breach of the Articles of Association because such a resolution had to be passed in an annual general meeting first.

"Any proposal to offer bonus shares should be placed before members for voting as provided in the Articles of Association," said Mr William Kettienya, a Kericho farmer and a former Tegat Tea Factory director.

KTDA managing director Lerionka Tiampati, however, said shareholders of the tea factory companies had agreed on the proportional voting system last year.

"This follows resolutions of the respective boards adopting the new system in September 2007," he said, adding that the change in the voting system was intended to comply with the Company's Act and ensure a higher calibre of directors were elected.

Farmers are now vowing to block bonus shares from conferring rights to take part in today's elections. The association added that growers had not approved the KTDA voting system. "KTDA wants to plant cliques of people to run the factories. We are ready to challenge this in court," Mr Kinyua told the Business Daily on phone.

Yesterday, some tea factories protesting at KTDA's attempt to change rules vowed to boycott the elections until the share holding issue was harmonized.

"We see the new voting rules as a deliberate effort to lock out majority of the farmers. We are demanding that the one farmer, one vote rule applies or we boycott today's elections," said Mr Kettienya.

The 54 KTDA-managed factory companies are all independent and are registered under the Companies Act. The factory companies have two types of share holding, commercial shareholders who earn dividends based on their equity contribution through deductions in earnings and the founders who take part in the decision-making process of the company.