I can't speak to the image, but I can speak to the film itself.

First, this is not a negative, so it's unlikely it was taken by a still camera. It could be slide film (i.e. a formulation that left a direct positive image on the film), but it's most likely a fragment of motion picture film, perhaps from a newsreel. The thin vertical line on the right margin looks like an audio track, but I'm not 100% sure if that was a common technology of exactly the period or if magnetic strip technology was the preferred one of the period. Most telling is the stripping/wear on the sprocket holes on the left side looks like it ran through a projector.

(Edit2: Just realized the image orientation is vertical - definitely a motion picture print)

AGFA on the left margin is likely AGFA-Gevaert, a German-Belgium company that made film in the period. It could be American film, as AGFA assets weren't seized until 1941, but it seems most likely German.

So... A souvenir from a broken German newsreel? Projection film broke often and for a weekly newsreel it would normally be discarded instead of repaired. If it was going in the trash, why not clip an interesting image?

Apologies that this is all speculation, but with a little digging or even a reverse image search might point you to the exact newsreel and period.

Edit: Cleanup.

Can you provide any more context about your grandfather in the second world war? Maybe his unit or his duties during the conflict? It would help us to create a context to the picture, which would be helpful to find the time of date and place when the picture was taken.