Organic waste - organic means related to living things. Organic wastes include human waste, animal waste, oil, urea (urine), fruit & vegetable waste. Organic waste does not have to be thrown away. It may be reused as a fertilizer through a process called compositing & the mixture is known as compost.
Composting - is done by putting organic waste in a bin & leaving some space for air to circulate. As heat and steam build up, the waste decomposes over time into a nutrient rich substance called compost. The compost is then applied to plant as manures. Hence (2) is the correct answer.