One of the main reasons to encourage kids to read fiction is to expose them to stories outside their current experience. We don't get kids to read Treasure Island because they can inherently relate to a story about 18th century pirates.

While it's true that the finer political nuances of Animal Farm are likely to be lost on most children, it's a perfectly comprehensible story in its own right, and it needn't be read narrowly as an allegory about Communism per se.