To grow sugarcane you must plant one piece (using the left trigger for Xbox, right click for PC) on a block of dirt or sand. The dirt or sand block must be directly adjacent to water. It will eventually begin to grow, and you can harvest it by breaking each “block” of sugarcane. You don’t have to break the bottom “block” of sugarcane in order to harvest the others, so an effective method is to plant lots of sugarcane and then break the top two blocks, leaving the bottom one intact. This means you don’t have to replant all the sugarcane every time.