Composting is an effective approach to solid waste management in Batticaloa, Sri Lanka. This six-month study assesses the operating proficiency of compost at the Koduwamadu Municipal Solid Waste Management Centre and its socio-economic effects on farmers and consumers. The mean analysis indicated that 17.7% of farmers strongly concurred that compost possesses significant limitations, including its unsuitability for large-scale agriculture whereas 13% of consumers strongly affirmed that organic products derived from compost provide health advantages (15.13 ± 4.04). Farmers highlighted significant work requirements and diminished yields in comparison with chemical fertilizers as their main concerns. Nevertheless, 82% of farmers concurred that compost is reasonable (Relative Importance Index (RII) = 0.820), and consumers valued the health and environmental advantages of compost-derived products (RII = 0.804). Logistic regression indicated that perceived benefits considerably enhanced favourable responses among farmers (coefficient = 0.250, p = 0.045), whereas encountered limitations did not significantly influence their overall perceptions coefficient = −0.150, p = 0.175). The views of consumers of organic products were significantly influenced by health benefits (coefficient = 0.300, p = 0.009), whereas concerns regarding increased costs had a minimal impact (coefficient = −0.100, p = 0.441). The Kruskal-Wallis H Test (H-statistic = 0.02, p > 0.05) revealed modest inequalities in farmers’ and consumers’ perceptions of compost’s advantages, disadvantages, and prospects. These findings underscore the need for improved compost quality and better nutrient release efficiency to make composting scalable and more effective. Additionally, raising awareness and educating both farmers and consumers could address knowledge gaps and increase the adoption of composting as a sustainable organic waste management strategy, contributing to Batticaloa’s efforts to manage waste sustainably.