Any thoughts or comments regarding cost/quality tradeoffs?
First question is "why is it not food grade?"
Is it contaminated and with what? I am not going to try to suggest all the possibilities here, except that distilling might clean up the contaminant.
Some very common contaminants are excess straw or foreign seeds or soil that make it unsuitable for some food processing. I don't consider these are contaminants as far as fermentation and distilling is concerned. If you are lautering the straw can be an advantage.
Barley is often downgraded from Malting quality to Feed for many reasons but very commonly because it is too high in protein, not much of an issue unless you are making beer, your yield will be down slightly but your grain cost is lower so it may be more economical.
Grains are sometimes downgraded because of poor germination test, possibly caused by frost or lack of moisture or too much rain, at the wrong tome. Most likely plenty of starch still available for conversion unless you are planning to malt it.
Grain size might be too small causing it not to come up to food specifications. Starch yield per Kg will probably be down a bit but so is the price. I haven't seen any research on this with grains but I suspect more grain flavour will come across in the distillate, you are a craft distiller so you might consider that an advantage.
On this theme of smaller gives more flavour, consider grapes that were grown under moisture stress. You get small grapes, unsuitable for table quality. Makes fantastic wine especially if they became infected with botrytis fungus. No way they would be "food grade"
With some of the feed-grade steam rolled corn I've seen, it's got occasional bits of dirt and cob, but we can get a decent starch conversion and product yield from it.