Cuba's not Communist. Cuba has social classes, dictators, and no power to the people. Not to mention it does trade with the West. That's basically failing every major Marx test to be Communist.
That said, Cuba has been exceptionally poorly managed. But the sugar probably has more to do with Brazil's constantly expanding sugar production depressing prices. There's no way Cuba can manage the economy of scale Brazil can with its sugar. Comparative Advantage clearly favors Brazil. The fact that government sugar mills in Cuba are closing is a partial sign of that.
Your statement is only partially true. The demise of the Cuban sugar industry has to do with the deficiencies of the regime and management of it. Castro, in 1959, blamed the sugar industry as the major determinant of underdevelopment in the island, and the “economic genius” Che Guevara said that the American sugar quota was and “instrument of imperialist oppression.” When Guevara was appointed minister of industries in 1961, in his pursue of diversification, he reduced the sugar cane cultivated area and diverted idle manpower to other activities. His attempt to industrialization failed and by 1963 the plan was abandoned. Fidel Castro reverse course in 1965 and declared that sugar was the backbone of the economy. In the following 25 years the sugar production grows by 40% and the island maintained his position as the world’s larger sugar exported. During those years Cuba sugar industry remained largely artificial. Cuba who was leaving behind the monoculture, was brought back to it under Castro’s impulsive and incompetent leadership.
The collapse of the Soviet Union in 1991 had disastrous consequence for the regime due to the discontinuance of the premium prices and credits received from the Soviet bloc countries. Due to lack of resources sugarcane yields and total sugar production fell steeply.
During the period 1961 to 1991 the Island survived thanks to the Soviet subsidy of $150billion, 5 billion a year. During that period the resources dedicated to the construction of houses, transportation, modern facilities, equipment and infrastructure were minimal. About 90 of the 161 sugar mills were built before 1913 and the capital investment on them was minimal.
The bulk of the money did not benefit the Cuban people since most of it was used to pay the cost of the wars in Africa, the subversion against the democratic governments of Latin America, the huge military force, and the repressive apparatus of the Department of the Interior.
In 2002 the regime announced a restructuring of the sugar industry, closing 71 of the 156 existing mills; production was targeted at 4 million tons. In 2006 Castro gave instructions to take urgent steps to increase sugar production, in response to a rise in world sugar prices. During the decade of the 1950s the average sugar production was 5.7 million MT; from 2000-2010 the average has been 1.9 MT after the "urgent steps to increase sugar production", only 33% of the production 51 years ago.
The restructure of Cuba’s sugar industry by the regimen had as main objective to restrict the private sector companies. Castro brothers regime never changed the way they do business. Castro describes his concept of administration when he said in 2005: “The central state administration doesn’t need to negotiate with any minister; it must issue orders to the ministers.”
Change is inevitable as is the importance of the management in the change. The management of change by Castroism has been disastrous by doing it hastily alternating with hesitation.
Many countries readapted the industry to the new conditions of the market. Brazil, India, Thailand, Australia and other nations have maintained their sugar industries, and have continued to develop new products derived from sugar cane, allowing them to continue increasing sugar production.
Cuba can neither regain its former place in the U.S. and world markets nor match the production costs of Brazil, today’s world leader. But even Brazil cannot cover all of the world’s sugar and bioethanol needs. There is room for an efficient, suitably niche of the Cuban sugar industry. To succeed, it must rely as far as possible on market mechanisms that ensure feedback and accountability.
Cuba has exceptional conditions for the planting of sugar cane and the know how to achieve high yields. It is the plant with better perspectives in the present and future global economy. In short to revitalize the Cuban sugar industry it is necessary to concentrate in the production of the ethanol and other products derived from sugar cane.