A federal marketing-order program in effect for almost 20 years to restrict the production of hops, a beer-flavoring crop grown mostly in the Pacific Northwest, will be terminated Dec. 31, the Agriculture Department said this week.

James C. Handley, the department's Agricultural Marketing Service administrator, said the order has failed to carry out and "even has obstructed" the program's purposes.

Hops are grown commercially in Washington, Oregon, Idaho and California. There are about 225, mostly large growers, according to the department's notice published Monday in the Federal Register.

Hops in California dropped from more than 9,000 acres in the early 1950s to less than 150 acres last year, the report said. Washington's hops increased from about 14,000 acres to more than 24,000 acres. The acreage in Oregon and Idaho has fluctuated periodically but has remained fairly constant, accounting for fewer than 5,000 acres each in 1984.

A federal marketing order for hops was started in 1966. By law, it is supposed to provide an orderly and stable market environment for growers and consumers. That has not been the case with hops in recent years, the report said.

"The salable quantity recommended for the past several years has not accurately reflected market needs, but, rather, has attempted to prevent the allotment percentages from cutting across the contracts producers have with dealers and to keep the price of leased-base acres at reasonable levels," the report said.

"This has resulted in actions by producers that are outside of the order's purpose, such as the leasing of allotment base to other producers, and has caused considerable controversy . . . . "

The report said the hops marketing order also "restricts entry so that producers who did not receive allotment base . . . in 1966 had to either inherit, purchase or lease allotment base . . . to market hops."

Marketing orders have been the subject of substantial debate within the Reagan administration between those who view them as restricting free-market competition and those who view them as necessary to a stable farm economy.